Risk of ‘Treasury always chickens out’ mentality at Stormont, MPs told

Stormont’s Executive needs to “do their job” and set a budget, Northern Ireland Secretary Hilary Benn has said.

He gave evidence to MPs after Sir Robert Chote, chairman of the Northern Ireland Fiscal Council, who said continued financial bailouts to Northern Ireland created the risk of a “Treasury always chickens out” mentality at Stormont.

Earlier this month, Mr Benn and Chief Secretary to the Treasury Lucy Rigby met leaders of the parties in the powersharing Executive to discuss the budget crisis.

Devolved ministers have failed to agree a budget for the current financial year, with departments operating on contingency budgets since April.

Ministers have consistently made the point that they need more funding from the Treasury to address a funding crisis facing public services in Northern Ireland.

After the Executive exceeded its budget in the previous financial year, the UK Government allocated £400 million to deal with overspend pressures, to be repaid over the next three years, and the Treasury conducted an “open-book exercise” looking at the Executive budget.

Asked why this exercise was not completed earlier by his department, Mr Benn told the Northern Ireland Affairs Committee there was “no reason why the Executive shouldn’t have done its own open book process before”.

“There’s no reason why the Executive shouldn’t have said to itself, ‘right, we’ve got all these pressures, what is absolutely unavoidable? What is we’d like to do if we had the money but we don’t? So what are we going to do about this?’.

“Rather than just saying ‘pressure, pressure, pressure, here’s a sum, how are you going to help us out?’. Because that is part of the responsibility that comes with being in government.”

Mr Benn said it is his “hope” that he will not have to set a budget for Northern Ireland, given that it “is the responsibility of the Executive, and they should do their job”.

“As far as I’m aware, there has never been a circumstance in which, when the Executive is in being and the Assembly is meeting, that a UK government has set a budget for Northern Ireland,” he said.

“There have been circumstances, of course, when the Executives come down where the government has done that, but the institutions are there, the responsibility is there with the Executive, and we are working with them to try and find a way through that but it is going to have to involve setting a budget.”

The Northern Ireland Secretary also said the department is “still in the process of establishing the facts about the nature of the likely overspend” last year, but added that with Andy Burnham set to take over as prime minister next week, the budget would be “the first item on the agenda” when he meets the First and deputy First Ministers.

Asked what implications there are for the Executive if they do not manage to stay within a set budget, Mr Benn acknowledged “there is a bit of a pattern where the Government does ride in”.

“The difficulty with that – it is a fact – is that some people may draw the conclusion ‘well, if we just sit here, then someone will come and do that again’, and that is a challenge.

He added: “I think my responsibility in advising the new prime minister, and that’s all subject to what happens next Monday, whoever is in this job, my responsibility is to say ‘this is the work we’ve undertaken, this is what we know about the nature of the true pressures, these are the options for doing something about it, these are the conditions that we would suggest that we put in place in return for any help – if there is going to be any help’.

“And then, of course, the new prime minister has to look at that alongside all of the other pressures that are on the public finances across all the areas of government, because it’s not just about Northern Ireland.”

Earlier in the session Sir Robert referred to the phrase “Trump Always Chickens Out” (Taco) used to describe activity of some investors in the US who make market predictions based on the assumption that US President Donald Trump will U-turn on an announcement.

“The danger is that the parties play a Taco trade with the ‘Treasury always chickens out’ or is encouraged to do so,” he said.

“So there is this inevitable tension here about the desire, obviously, not to do anything that would be destabilising and have serious consequences for the citizens of Northern Ireland, but on the same hand, if you continue to provide that sort of resource, which is supposed to be exceptional, but you move in a direction when it looks like it’s normalising, that is not setting up incentives that are encouraging nettles to be grasped.”

Sir Robert also outlined that if the UK Government has to legislate for a budget in Northern Ireland “they will need to decide what, if any, strings they wish to attach to that”.

“If we’re in a situation where we have a new prime minister, new set of treasury ministers, I’m sure that people will be telling them that you only have one chance to make a first impression, and if you want to get away from the the cycle of the expectation that there will always be a bailout coming along, then you really only have one chance to do it,” he said.