Northern Ireland City Deals

Commons Urgent Question

The following Answer to an Urgent Question was given in the House of Commons on Wednesday 9 October.

“As the Chancellor set out in July, the Government have inherited a £22 billion black hole in the public finances. As a result, the Treasury is having to consider a range of measures to deal with this significant problem. Last month, the Treasury informed the Northern Ireland Department of Finance that the UK Government’s contributions to the Mid South West deal and the Causeway Coast and Glens deal would now be considered as part of the spending review. The Belfast regional city deal and the Derry/ Londonderry and Strabane city deal are unaffected and proceeding as planned. Since the announcement of the pause on those two deals, I have met with the First Minister, the Deputy First Minister, the Chief Secretary to the Treasury and the Northern Ireland Finance Minister. I will also be meeting the chief executives of those two deals shortly.

Everyone in Northern Ireland understands the importance of the city deals to economic growth and encouraging investment, and this Government are committed to working with the Northern Ireland Executive and businesses to make the most of the huge economic opportunities that now lie ahead. That is shown by the progress being made on the Belfast region city deal and the Derry/Londonderry and Strabane city deal. I attended the Derry/Londonderry and Strabane city deal signing on 18 September. The UK Government’s £105 million investment will help to progress transformative innovation, including digital and health projects, which will build on the region’s well-established research excellence. The Chancellor will set out the results of the first phase of the spending review on 30 October, which will include an update on the two outstanding city deals”.

11:56:00

My Lords, does the noble Baroness understand the deep dismay over the city deal pause that the Government slipped out late on Friday 13 September, while Parliament was in recess, particularly in the two areas where the deals remain paused: the Mid South West region, which I visited in February, and Causeway Coast and Glens, where I signed the terms of agreement in April and where there is now great uncertainty and limbo? Will she apologise to the House for the shoddy and disrespectful way in which this was announced? Can she assure us that the Secretary of State will employ the full weight of his office to persuade the Chancellor, in the forthcoming Budget, to lift the pause so that these deals can now proceed as planned and deliver investment, growth, jobs and prosperity for the whole of Northern Ireland?

I shall be clear: if the former Government had not left us in such a challenging fiscal situation, there would be no financial pause and we would not be in the position we currently are. While I agree that the timing was unfortunate, whenever the announcement was made it would not have been welcomed by those people whom it affected. I assure your Lordships’ House that, since the announcement was made, the Secretary of State and all the officials at the NIO have been working tirelessly with key partners. We are doing everything that we can to make representations to our very dear and close friends at the Treasury, to whom I am going to be very nice for the next 20 days, making it clear how important these deals are to the future of Northern Ireland.

My Lords, I too express disappointment at the timing and the way in which this has been handled. It has caused great economic uncertainty and a loss of momentum for those areas which were expecting to receive the funds. Yesterday, the Secretary of State for Northern Ireland said that an impact assessment had not been carried out. Can the Minister say how the Government intend to assess the economic consequences of these decisions, not least their impact on regional development in Northern Ireland?

I have seen no such impact assessment either. The Secretary of State was clear about this yesterday. However, we are making every effort to demonstrate the potential success of these deals. As we have seen with the Belfast region deal, £350 million of UK government money has led to £1 billion of investment in association with the deal. I turn to the timescale. We do not know what will be announced in the Budget and spending review. This is a six-week pause in a programme that has so far taken three years and is likely to go on for another 15. Six weeks is an appropriate pause to make sure that every penny of government money is appropriately allocated.

My Lords, in their recent announcement that they were going to grant an inquiry in the Pat Finucane case, the Government made a lot of the fact that previous commitments had been made. It was an entirely unnecessary decision, but they said it was based entirely on previous commitments. Previous Governments have committed very strongly in Command Papers and other agreements to these city deals for Northern Ireland. Why are the Government not applying the same standards and principles to this important case, which has delivered extremely good results in Belfast?

My Lords, the fiscal situation we inherited means that we are not in the position we believed we would be in when we came to government in July. That is the reality. There are many pauses to projects across the United Kingdom while we review to make sure that appropriate value for money is secured for every deal. This Government’s priority is the delivery of growth. The Secretary of State and the NIO are making every representation to the Treasury to make it clear that the Causeway Coast and Glens deal and the Mid South West deal will help us deliver that long-term plan. Like everybody, I will be waiting to see what happens in 20 days from today—fewer than three weeks—in the outcome of the Budget.

My Lords, I thank my noble friend for her answers on this fairly vexatious issue, which landed on the people of Northern Ireland on Friday 13 September. City deals are a vehicle for regeneration and rehabilitation throughout Northern Ireland. I welcome the announcement about the reinstatement of the money for the Greater Belfast deal—it impacts the area I live in and there are many projects contained in that—and the Derry deal. It is important to address regional imbalances and inequalities in Northern Ireland. Could my noble friend, along with the Secretary of State, champion the outstanding city deals—namely, those for the Causeway Coast and Glens and Mid South West—with the Treasury to ensure that the funding is forthcoming? It is a ready means of addressing good regional development in Northern Ireland and those regional imbalances.

I reassure your Lordships’ House that the Belfast region deal signed in December 2021 was never subject to any pause. I am delighted that the Secretary of State attended the signing of the Derry/Londonderry and Strabane deal on 18 September 2024. On next steps I say that, even as I sat next to my noble friend Lord Livermore, I was making a case for the two city deals and I will continue to do so. I promise noble Lords that the Secretary of State, who has met the Chief Secretary to the Treasury in recent days, is making every possible persuasive argument about why these deals should go forward. However, as I said, we will await the decisions in the Budget.

My Lords, the noble Baroness has quite understandably mentioned the fiscal situation. Is she aware—I am sure she is—that nearly half a billion pounds has already been spent by His Majesty’s Government on the trader support scheme? In addition, £190 million has been spent building border customs posts at Larne and other places. What will His Majesty’s Government do about this ridiculous Windsor Framework, which is separating out Northern Ireland from the rest of the United Kingdom? There is a real solution of mutual agreement, which could make the difference and save money that could then go into the city deals.

The noble Baroness will be very aware that, since this Government came to office in July, we have tried to reset relationships with the European Union to ensure smoother relations. The Windsor Framework is an important step in delivering trade and securing prosperity for the people of Northern Ireland. We are doing everything we can to make sure that relations between GB and Northern Ireland work effectively.

My Lords, the noble Baroness will be aware that the city deals are cocktails of funding. It is encouraging to get private sector funding to go along with the public sector funding. She will also know that, where these cocktails are involved, funds from different public sector bodies and the private sector are given within a timeframe. If the deals are subject to significant delays, there is a real risk that some of those funders will drop out and therefore the schemes will be lost. I ask the noble Baroness to give the House an assurance that she and her colleagues are acutely aware of that. We do not want the funding sacrificed, particularly that from the private sector.

I completely agree with the noble Lord, which is why the Secretary of State is meeting this week the chief executives of the Causeway Coast and Glens and Mid South West deals, to see what other support we can give them for reassurances. I am also delighted that the Northern Ireland Executive continued the funding for the two deals so that activities can proceed. We will know in three weeks; I appreciate that this is far from ideal, but we are not necessarily talking about a very extended delay—we will know in 20 days.

My Lords, I understand that there were a number of announcements by the previous Government, but no money put in the budget. Is this one of them?

Unfortunately, because of the previous Government’s mishandling of our fiscal situation, leaving us with a £22 billion deficit, and their having spent the reserves three times before July—that is something quite special—every penny of public funding in-year now needs to be reviewed. However, we will continue to make the arguments based on our number one mission of economic growth. I hope that the Treasury will smile favourably on these two deals. We will continue to do what we can.