Debate contribution: Budget Bill: Second Stage

Debate contribution by Dr Caoimhe Archibald on 19 February 2024.

MLA

Dr Caoimhe Archibald

Party at the time

Sinn Féin

Date

19 February 2024

Type

Debate contribution (made as a minister)

Business

Executive Committee Business

Heading

Budget Bill: Second Stage

Assembly identifier

Official Report component 4223399

Read the official Assembly record

Text

I beg to move

The Second Stage debate is on the Budget Bill that will authorise the expenditure of Departments for the 2023-24 financial year. The Executive returned just over two weeks ago, so this was the first opportunity that I had to progress a Budget Bill. The lateness in the financial year and the approach taken by the Secretary of State to the Budget means that not progressing the Budget Bill at pace could result in Departments running out of cash. There is an urgent need to secure Royal Assent for the Budget Bill to ensure that Departments and other bodies can continue to access the cash that they require from the Consolidated Fund to deliver services for the remainder of the financial year. The situation is more challenging than would normally be the case, due to a combination of factors, many of which are beyond our control. This is clearly not an acceptable or tenable position, so swift action was agreed by ministerial colleagues last Thursday. Departments are currently operating under the authority of the Northern Ireland Budget (No. 2) Act 2023, which is based on the Budget that was set by the Secretary of State in April 2023 and which, as we are all very well aware, falls far short of the funding that Departments need. As a result, Departments will reach the cash limits set by that Budget Act much earlier than would normally be the case. In addition, the timing of the Executive's restoration and the need for them to have decided on allocations in response to their consideration of the forecast overspends and funding of public-sector pay awards means that the Budget Bill could not be prepared until this late point in the year. As a result of that combination of circumstances, I ask the Assembly to consider the Budget Bill in shorter time than usual. The introduction of the Budget Bill would normally follow immediately after the Assembly's consideration and approval of the spring Supplementary Estimates (SSEs), which would involve a debate on the Supply resolutions. With the timing of events this year, work is only now able to commence on the preparation and publication of the Estimates. As it is a document of 300-plus pages, involving detailed financial tables, it is not possible for it to be completed and published before the Budget Bill needs to be introduced. Instead, I will bring the Estimates document to the Assembly as soon as the work on it has been completed for the Assembly to consider. After the Assembly has passed the Budget Bill, there is a further stage for the Bill to be considered by the Attorney General and the Advocate General in order to confirm legislative competence before it can be submitted for Royal Assent. Any delay in progressing the Budget Bill will increase the risk that we could reach the limit set by the Northern Ireland Budget (No. 2) Act 2023. In that situation, we could face a position in which my Department is unable to issue cash from the Consolidated Fund to any Department that has reached its cash limit.

Yes.

I will come on to the headroom later in my contribution. This is an exceptional situation in which we find ourselves so late in the financial year. I assure Members that I do not ask this lightly of the Assembly. I am cognisant that doing so restricts the scrutiny and consideration space that the Assembly is entitled to give the Bill. I assure Members that it will not, in any way, be regarded as establishing a precedent. My Department and I will ensure that the Assembly has the proper time required to fully consider the next Budget Bill, together with the 2024-25 Main Estimates, once the Executive have agreed their 2024-25 Budget. For many people, the process today may seem technical and complex, but its importance and significance must not be underestimated, as it enables us to keep delivering public services and prevent Departments from running out of money. Money and financial packages have dominated the agenda since the Executive returned, and my Executive colleagues and I were determined to take swift action to address the challenges that we face. Last Thursday, the Executive prioritised public-sector pay with an allocation of £688 million for our hardworking public-sector workers. That announcement shows that the Executive are working together and taking action in the most challenging circumstances. It is an important step for our health workers, teachers, police, transport workers and civil servants because it enables negotiations with trade unions to start immediately. I want to see them conclude as quickly as possible in order to ensure fair pay for workers. The funding provided for this year's pay awards is non-recurrent. That will add further pressure to the 2024-25 Budget and, unfortunately, means that our finances are likely to remain in a very challenging position. Members will have noted the independent Fiscal Council's assessment of the restoration package last week, which supports the Executive position of our being underfunded on the basis of need. The Fiscal Council reiterates that the package does not address our underfunding in any sustainable or long-term way. If the British Government do not address that, we will reach a cliff edge. It is a case of when, not if. The Bill also includes a Vote on Account in order to allow Departments to continue to deliver services into the early months of the incoming 2024-25 financial year. It is important to stress that that does not constitute setting a 2024-25 Budget; that Budget-setting process will follow. Once the Executive have agreed their 2024-25 Budget, it will be brought to the Assembly to consider with the 2024-25 Main Estimates and the Budget (No. 2) Bill. The timing of the Executive's formation and the need for the Executive to carefully consider the prioritisation of allocations in the Budget for 2024-25 mean that it is possible that when the Budget (No. 2) Bill is brought to the Assembly, the Assembly may not be able to complete consideration of it before the summer recess. In order to remove any risk to Departments' cash position, and to ensure that the Assembly is not curtailed in the time available to it, the Executive have agreed that I seek a larger-than-normal Vote on Account in this Budget Bill to ensure that it will be sufficient to last until the summer recess. Although the Vote on Account would normally be set at 45% of the previous year's provision, this Budget Bill contains a Vote on Account set at approximately 65%.

As is normally the case for Budget Bills, I asked the Finance Committee to agree to the use of the accelerated passage procedure under Standing Order 42(2). I put on record my gratitude to the Committee for considering that request at such short notice and for confirming its agreement to the use of accelerated passage. I am also grateful to the Assembly for its agreement that Standing Order 42(5) be suspended for the Budget Bill as an exceptional step to allow the Bill to complete all its stages in less than 10 days. Standing Order 32 directs that the Second Stage debate:

"shall be confined to the general principles of the Bill."

I shall endeavour to keep to that direction. The Bill will authorise the use of £23,937,688,000 from the Northern Ireland Consolidated Fund and the use of resources totalling £28,817,828,000 by Departments and certain other bodies listed in schedules 1 and 2 to the Bill in the year ending 31 March 2024. That is this financial year. The Bill will also authorise the issue of £15,724,763,000 from the Northern Ireland Consolidated Fund and the use of resources totalling £18,731,611,000 by Departments and certain other bodies listed in schedules 1 and 2 to the Bill in the year ending 31 March 2025. That is the Vote on Account, which, as I have explained, does not constitute the setting of a Budget for the 2024-25 year. Its purpose is merely to allow Departments to continue to operate and to provide services in the early months of that year, pending the consideration of the Executive's Budget for that year through the Main Estimates and the Budget (No. 2) Bill. The cash and resources are to be spent and used on the services listed in part 2 of each schedule. The Bill also authorises the use of income in 2023-24 by Departments from the sources set out in part 3 of schedule 1. Those amounts supersede the amounts that were previously authorised by the Northern Ireland Budget (No. 2) Act 2023, which was legislated for by the Secretary of State in Westminster. I draw Members' attention to the point that, although the vast majority of the expenditure by all Departments is done on the authority of statutory powers provided through legislation passed by the Assembly, there are occasionally some functions that may be done on the sole authority of that Budget Act. The Assembly's authority is sought for the following items of expenditure under the sole authority of this Budget Bill: in the Department for Communities, £11 million on welfare reform and mitigation and £40,000 on the annual uprating of pneumoconiosis; in the Department for Infrastructure, £1·5 million for active travel; in the Department of Finance, £450,000 for the Fiscal Council; and in the Executive Office, £4 million for the truth recovery programme, £2 million for ending violence against women and girls, £1·4 million for actions relating to historical institutional abuse (HIA) and interdepartmental working, £3 million for the Homes for Ukraine scheme, £210,000 on full dispersal of asylum seekers, £22,000 for refugee integration proposals, £96,000 for strategic migration partnerships for British nationals overseas and £102,000 for strategic partnerships for asylum. Clause 5 of the Bill provides for the temporary borrowing by my Department in 2023-24 of £11,968,844,000. That is approximately half the sum authorised by clause 4 for issue out of the Consolidated Fund. Similarly, clause 11 provides for temporary borrowing by my Department in 2024-25 of £7,862,382,000. I must stress that clauses 5 and 11 do not provide for the issue of any additional cash out of the Consolidated Fund or convey any additional spending power. Rather, they enable my Department to run an effective and efficient cash-management regime and ensure minimum drawdown of the block grant daily. That is very important when contemplating the daily cash requirements of our Departments.

I will briefly mention the allocations to which the Executive agreed last Thursday and which I detailed in my written ministerial statement. We had to wait until 13 February for the Chief Secretary to the Treasury to confirm the detail of the financial package that accompanied the restoration of the Executive. The key elements that are relevant to the 2023-24 position are £1,045·6 million resource departmental expenditure limit (DEL) in 2023-24 for general overspend pressures and pay, of which £559 million is repayable, and the deferral of the repayment of £559 million for two years, with a commitment to writing it off, if the Executive publish a sustainability plan by May 2024 and implement it by May 2025. I have written to the Chief Secretary to the Treasury to request an urgent meeting to discuss the conditions and timescales, which I regard as unrealistic. The total amount of £1,045·6 million resource DEL available in 2023-24 takes account of the repayment of the outstanding reserve claim for 2022-23. That amount is supplemented by £21·9 million of existing funds that have become available due to changes in regional rate forecasts and easements identified by Departments in respect of earmarked funding, which Departments could use only for the purpose for which it was originally intended.

Yes, go ahead, Sinéad.

Thank you, Sinéad. That was very helpful. The resource DEL allocations to Departments, which were set out in my written ministerial statement, cover the current level of Department forecast overspends, totalling some £380 million, and provide an additional £688 million for pay. The allocation for pay awards is just over £100 million higher than the £584 million provided specifically for pay in the financial package. That funding has been provided as a total resource DEL allocation for each Department to allow individual Ministers to manage their budgets effectively and to avoid influencing pay negotiations. It is now for individual Ministers to manage pay awards within the funding envelopes provided. My Department will begin discussions immediately with unions on the 2023-24 pay awards for those staff on NICS terms and conditions. The additional funding allocations agreed by the Executive will provide much-needed relief to our public-sector workers and help to offset the pressures facing Departments. Significant challenges exist across all areas of our public services. The harm done by the decisions made in an effort to live within the Budget set by the Secretary of State in April cannot be reversed in the few weeks of the financial year that are left. Unfortunately, the uncertainty over the total quantum of funding available and the need to wait for the Chief Secretary to the Treasury to confirm the detail of the financial package that accompanied the restoration of the Executive meant that it was only possible for the Executive to make a decision on 15 February 2024 on allocations to Departments to address overspends and to provide funding for public-sector pay awards. To have delayed work on commencing the preparation of the Budget Bill until after that decision was not viable, due to the risk of Departments reaching their cash limits before the Bill could be passed and Royal Assent secured. Instead, the Executive gave their agreement for my Department to prepare the Budget Bill to include headroom to ensure that Departments had the authority to spend the budget that has now subsequently been allocated to them by the Executive. The Budget Bill is, therefore, written to a position that includes that headroom. All Ministers have committed to constrain their Departments' expenditure, including pay awards, to the budget allocation agreed by the Executive and not by the amount of headroom included in the Budget Bill if that is any higher. It is a highly unusual situation, which has been driven by the timing of events. It is not anticipated that we will face such a situation again, as the Executive now have the opportunity to agree their Budget for 2024-25 and for Ministers to set their Department's expenditure plans accordingly. The numbers contained in the Budget Bill are significant, and I am sure that Members will agree that it is not an easy task to translate those figures into the delivery of public services on the ground. The reality is that it is critical for the Budget Bill to be passed to ensure that public services can continue to be delivered, including in our health services, our schools, our road services and our water services. On that note, I will conclude, and I will be happy to deal with any points of principle or detail on the Budget Bill that Members may wish to raise. I thank Ms McLaughlin for giving me a break to get my voice back.

2,518 words. Text as published by the Northern Ireland Assembly.

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