Select Committee on Northern Ireland Affairs Minutes of Evidence

Examination of Witnesses (Questions 40 - 59)



  40. So nothing automatic, but in the hands of the Treasury to note?
  (Mrs Brown) Yes, if it is not already listed as a comparable sub-programme there would have to be some special process to get it into that list.

  41. Is that listed, in terms of railways?
  (Mrs Brown) There is a list—I think the most up to date list of comparable sub-programmes is included in a document that Treasury issued at the end of March 1999 about funding arrangements for the Scottish Parliament, National Assembly for Wales and the Northern Ireland Assembly and there is an annex which lists a range of sub-programmes and shows the extent to which, if at all, they are readable across to Scotland, Wales and Northern Ireland.

  42. And is there a mention of railways within that?
  (Mrs Brown) There are some mentions of railways; from a quick look at them I do not see read-across to the devolved administration, but the sort of things I am looking at are British Rail privatisation, British Rail pension funds, residual British Railways grant, British Railways Board, London Regional Transport, Rail Consultancies and so forth.

  Mr Clarke: Okay. I think that concludes my questions, Chairman.

  Chairman: You must tell me if this is an unreasonable question? Ah, we are going to be interrupted by a Division in the House of Commons, on the floor of the House. It is now 21 minutes to 5. I suggest—and we apologise to you for this break, but it does happen. I suggest that the Committee reconvenes at 10 minutes to 5; that gives us 11 minutes to vote.

  The Committee suspended from 4.38pm to 4.51pm for a Division in the House.


  43. I will carry on and I was going to ask a question that you might say is outside your terms of reference and you could not answer, but it follows on the questions which Mr Clarke was asking you about the Barnett Formula. We are, of course, conscious that we are meeting in the shadow of the irony of Lord Barnett's own evidence to the Treasury Select Committee last week in which he made it perfectly clear that the arrangements which were established in 1979 to which the name the "Barnett Formula" has been accorded by virtue of his being the Chief Secretary to the Treasury at the time, were really pretty rough and ready and they may have served very well as a formula in the period since, but that they were not in fact the product of any very precise analysis of need in the various component parts of the United Kingdom and in that sense they were statistically formulaic. The question I wanted to ask—and you must forgive me for its innocence—as I understand it, during the period prior to devolved administration and in particular in the period before the cease-fire, the decisions taken by the Government in terms of the money they were receiving under the Barnett Formula—I am ignoring Ministry of Defence spending which was obviously quite separate—would have caused there to be a bias on the part of the Government towards Law and Order spending, security spending in the nature of the problems which the Province then had? First, is that a fair question?
  (Mrs Brown) Yes.

  44. It is both a fair question and the observation is correct?
  (Mrs Brown) Yes.

  45. Right. Now if we move to a situation of a devolved administration where the devolved administration is going to take over in terms of what we are now talking about a very considerable slice of public expenditure transferred over, the fact that there has been an historic bias in favour of Law and Order expenditure, which I understand is not being transferred, would that in fact have produced a bias in terms of the amount that is transferred?
  (Mrs Brown) I believe not. Under direct rule the bias towards spending on Law and Order was a bias decided upon by Government Ministers in Northern Ireland because they set—

  46. I understand that. It is the consequences now that quite interest me?
  (Mrs Brown) As to whether the devolved administration has lost access to that funding?

  47. Is there a division in terms of security spending between what remains with the Secretary of State and what is transferred to the devolved administration?
  (Mrs Brown) Yes, the Secretary of State retains responsibility for the funding for policing, criminal justice, etcetera and that is in Vote 1.

  48. I am sorry; you must forgive the innocence of my question. If, because of the historic bias, there is more money going into Vote 1—not more money overall—but there is a distorting bias into Vote 1 because of history, does that confer an inflexibility on the resources available under Vote 2?
  (Mrs Brown) The Northern Ireland block which existed during direct rule was split in preparation for devolution and at that time there was the split between NIO's Vote 1 which we retained and the money for the devolved administration in Vote 2. A decision was made on the quantum of resources which should go to the devolved administration as opposed with staying at the Northern Ireland Office and that took account of the needs which the Northern Ireland departments were projecting and the views of the Government as to how that money might best be used to serve Northern Ireland as a whole. So the split between security funding and non-security funding was made on the basis of a very conscious decision about trying to get the right balance. Subsequent to that, the money that the Northern Ireland Office has for security expenditure is something which is scrutinised closely by Treasury and it is not a case that we can assume that what we have we hold or that we get automatic increases if we ask for it. Our budget now is a matter of negotiation with Treasury.

  49. And therefore is outside the Barnett Formula?
  (Mrs Brown) Yes, it is.

  50. Right, and to ask a peculiarly ignorant question, and has always been? I would be a little surprised if it had always been.
  (Mrs Madden) When the Law and Order Vote was part of the Northern Ireland block finances, it was—as were all of those finances—done through the Barnett Formula and it is only since devolution that the resources have been split between what remains in the Law and Order Vote and Vote 1 and the moneys that have moved to the devolved administration has the Law and Order Vote now been assessed on need and not Barnett because we are now, in fact, a stand-alone Whitehall department which bids to Treasury for its needs.

  51. Yes.
  (Mrs Madden) Whereas the Northern Ireland Assembly bids on the basis of Barnett and has Barnett as the funding arrangements that have been decided upon by Treasury for funding all three of the devolved administrations. Barnett continues to be the mechanism.

  52. But let me—again, I apologise for my ignorance, in the case of Scotland and Wales, are they also stand-alone in terms of their negotiation with Treasury, that part of it that is not devolved?
  (Mrs Madden) Scotland Office stands alone as I understand it and bids separately to the Treasury for its funding. The Scottish Parliament is funded through the application of Barnett. As far as I understand the position to be.

  53. Yes, and do you have a view about Wales?
  (Mrs Madden) I understand that Wales is the same. Certainly the Welsh Assembly and the Scottish Parliament and the Northern Ireland Assembly all are funded through the funding arrangements which Treasury have published and assessed through the mechanism of Barnett. The Secretary of State for Northern Ireland is in a quite unique position where he holds responsibilities which have not been devolved to the local administration and in his instance he applies to Treasury for his funding on the basis of need.

  54. So any distorting effects of the security expenditure which might have existed under direct rule has effectively been eliminated by the separation of the funding and security being made a straight forward piece of negotiation between the Northern Ireland Office and the Treasury.
  (Mrs Brown) That is correct.

  Chairman: You have been extremely helpful and I am very grateful to you for having answered the questions which I asked. If you decide you want to modify any of the answers afterwards, do not hesitate to do so. Mr Thompson?

Mr Thompson

  55. Just before I ask this other question, could you just say a little bit more about the last questions. Under direct rule when we had severe security problems, the overall expenditure in Northern Ireland was based on a direct grant which presumably in some way related to the whole Government expenditure in the United Kingdom. As the security requirements decreased was there then virement between the Northern Ireland Office and the Northern Ireland departments and now with the separation, does that mean that if the security expenditure goes down does that money go back to the Treasury and not back to the environment through to the Northern Ireland departments?
  (Mrs Brown) If I answer your second question first, that is correct. If NIO does not require as high a level of resources for security next year as it did this year, the money would go back to Treasury or back to the centre rather than moving to the Northern Ireland departments. In the past, decisions about levels of expenditure were made indeed on the basis of looking at the Northern Ireland block and decisions were made as to the relative priorities of security versus health versus education, etcetera and money was able to shift freely to and from security areas.

  56. Does that not in effect mean the Northern Ireland departments now are, to some extent, at a disadvantage to what they were at when they were under direct rule?
  (Mrs Brown) That is difficult to say because I suppose it depends on the state of the security situation and the way in which it developed. There were times in the past where actually with the Northern Ireland system, the local departments would have felt at a disadvantage from being part of one block because when the security situation was bad and additional security resources were needed; those effectively had to be drawn by finding savings in the Northern Ireland departments' programmes. So it could work either way.

  57. But the overall block under direct rule was based on the formula that gave the proper proportion and fairness to Northern Ireland, is that right?
  (Mrs Brown) That is what it attempted to do. That is what it was meant to do. There are different views as to whether it was completely successful in doing that.

  58. How can it now be guaranteed that when the two blocks are separated that Northern Ireland overall gets its proper share of the UK resources?
  (Mrs Brown) That is the situation where Northern Ireland has to depend on Barnett and any special pleading, special negotiation it can make to Treasury. I am sure if you were asking that question of the devolved administration, the devolved administration would say it does not have as much resources as it wishes to have or as it needs to have; that is the view of the devolved administration. I am sure if you were talking to Treasury you might get a rather different perspective on it.

  59. Could we also add, or in the past it might have been able to have?
  (Mrs Brown) I do not quite follow your question.

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