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Lord Graham of Edmonton: They are both very good.

Lord Glentoran: My Lords, I thank the noble Lord. The reason why direct rule has had to be re-imposed today is clear. There has been a complete breakdown of trust between the parties that signed the agreement. Does the noble and learned Lord the Lord Privy Seal agree that we are here today entirely because of the republican movement's failure to fulfil its commitments under the Belfast agreement to make the clear and unambiguous transition to exclusively peaceful and democratic politics?

The agreement called for the complete disarmament of all paramilitary organisations. In his speech during the referendum campaign in May 1998 the Prime Minister said that there had to be "progressive abandonment of paramilitary structures". However, since the agreement Sinn Fein has continued to pursue a twin-track policy of serving in government while remaining inextricably linked to the terrorist organisation known as the IRA.

Does the noble and learned Lord agree that this is completely unacceptable? Does he also agree that the time has come to operate the same threshold for Sinn Fein's participation in the government of Northern Ireland as the Taoiseach insists on in the Republic of Ireland; namely, no private army?

The catalogue of republican breaches of the ceasefires over the past year is compelling. We had the arrest of three republicans in Colombia suspected of collaborating with the narco-terrorist group FARC; we had the break-in at Castlereagh police station, strongly suspected as being the work of the IRA, which has led to hundreds of people being re-housed across the Province; we had the discovery of target lists of members of my party and updated information on military targets in Great Britain; and we had a summer of street violence in which, according to the police, known republicans—along with loyalists—were among the main protagonists. We have the paramilitary beatings and shootings, the exiling of people from their homes—again carried out on both sides—that are a daily feature of life in parts of Northern Ireland. And, a week last Friday, we had the discovery of a republican spy ring in the heart of government at Stormont. I hope that it is not in Westminster.

Among the documents uncovered in the police raid on Sinn Fein's offices—a party in government—were transcripts of conversations between the British and Irish Governments, the Government and the Northern Ireland parties, and even transcripts of conversations between the Prime Minister and the President of the United States. Does the noble and learned Lord agree that all of this is clearly incompatible with a commitment to what the Belfast agreement calls "exclusively democratic and peaceful means"? If he

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does, then is it not also the case that by suspending the institutions, and restoring direct rule, the Government are punishing the innocent along with the guilty?

Would not the right response to this crisis have been for the Secretary of State to have fulfilled the commitment he gave to Parliament in July to take action against the one party—Sinn Fein—that is in breach of its obligations? In my party's view, the Secretary of State should have tabled a Motion before the Northern Ireland Assembly this week for the exclusion of Sinn Fein. And had that failed he should have done what we have been urging him to do for a year now and taken powers here at Westminster to exclude any party in breach of the cease-fire and the agreement.

This is a power that we believe should be available to the Secretary of State. Therefore, will the Lord Privy Seal now urge him to take it so that devolved government can be restored with an Executive comprised of those parties, Unionist and nationalist, that are committed to peaceful and democratic politics?

It is clear that the political process in Northern Ireland is in a deep crisis. The next few months will be critical. But we remain committed with the Government to the implementation of the Belfast agreement, and we want to see devolved government re-established on as inclusive a basis as possible. Yet that can be done only on the basis that all parties operate under the same rules and on a level playing field.

There can be no place in a democracy for private armies. Responsibility now rests with those who have for too long been ambiguous in their attitude to violence to make the transition. Otherwise, as things stand, direct rule will, regrettably, be with us for some time to come.

6.53 p.m.

Lord Smith of Clifton: My Lords, I, too, thank the Lord Privy Seal for repeating the Secretary of State's Statement.

We have, of course, been here before. The politics of intransigence has triumphed yet again. One wonders whether it will always surface to torpedo the process of Northern Ireland ever becoming a mature and stable democracy. We must always hope and pray that the politics of transcendence, to borrow Professor Paul Arthur's felicitous phrase, may one day allow an enduring democratic system to exist.

History seems to be repeating itself with monotonous and depressing regularity, but it is vital to note that the present crisis is not the same in all respects as that which erupted previously. What occurred in 1999 led to a three-month suspension of the Executive and the Assembly. On that occasion, both institutions were in possession of a relatively fresh mandate from the elections of 1998. Now, by contrast, both have a fast waning mandate that, in the normal course of events, would have been refreshed or changed with the elections that were due next May.

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The second difference is that this time the suspension of Stormont is likely to be considerably longer than three months. That means that what is left of the various parties' mandates in practice has now been snuffed out. Therefore, I would argue strongly that unless the Assembly and the Executive can be reconvened within a month—and, as I say, that is very unlikely—all salaries be terminated.

I raised this issue in an amendment that I proposed at the Committee stage of the Northern Ireland Bill 2000. I was given assurances then that salaries would be kept under review by the Secretary of State. This time, I understand, the Executive will lose all their ministerial emoluments, and Assembly members will have token reductions in the already disproportionately inflated salaries they voted themselves with unseemly alacrity.

There is an unanswerable case for terminating their salaries after a month on two grounds: first, one of principle in that they are not doing the business; and, secondly, particularly in the context of Northern Ireland, it is the quickest way to concentrate minds.

Can the noble and learned Lord say what the policy of Her Majesty's Government will be on this issue in the event of a prolonged suspension? It looks as though they may be waiting six months. That, frankly, is far too long.

Another difference between now and two years ago is that the political vacuum created by the suspension of devolution will not lead to a re-imposition of direct rule of the kind that has traditionally obtained. It will not be a return to the status quo pre-1998 as the Unionist opinion fondly hopes. As I have said previously in your Lordships' House, without a speedy restoration of devolution the only practical alternative is some form of condominium arrangement operated between London and Dublin. If that was true earlier, I believe it is much more so now. In the two years that have elapsed, there has been much sensible cross-border collaboration in tourism, waterways, agriculture and in other practical ways.

It is inconceivable that the two governments of the UK and Ireland would allow such constructive activity to be halted or mothballed now. A momentum has been established and the achievements are there to be seen. I predict that what we shall observe is a quickening in the pace of such partnership activity between London and Dublin in the governance of Northern Ireland. The future will be "Maryfield with knobs on", as Dr Maurice Hayes so graphically described it in his column last week in the Irish Independent.

Such a development is inherent in any prolonged suspension of the Assembly and power-sharing Executive. The principle of power sharing is here to stay. If it ceases to be practised via the conduit of the Assembly and the Executive, then it will be carried on by a London/Dublin condominium. I am pleased that that was, to some extent, re-affirmed in the Statement. But I would ask the Leader of the House to be more specific and to give us some details on how he sees this collaboration with Dublin developing.

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For some time, perhaps for most of the time since 1998, there has been, what I shall call an implicit prevailing consensus within governing circles at all levels that all was manageable for so long as the UUP and the SDLP held the reins of power in the form of the First Minister and Deputy First Minister posts. Unfortunately for this view, both parties have been losing their electoral support at an increasing rate to the DUP on the one hand and to Sinn Fein on the other. The so-called middle ground of politics, on which the prevailing consensus relied, has fast been disappearing.

All of this has clearly undermined the rationale of the prevailing consensus which, in recent months, has been valiantly attempting to shore up a false political equilibrium. There have been press reports of late that London and Dublin have been considering prolonging the life of the Assembly beyond its constitutionally prescribed limit, for fear of the likely outcome of the scheduled elections in May. If the press is to be believed, one reason perhaps for supporting suspension now is the rather perverse one that it would at least pre-empt any such gerrymandering. Tinkering with scheduled elections in this way should be unthinkable to any democratically elected government in all contexts, but particularly so in that of Northern Ireland. I trust that the press rumours are totally without foundation. I invite the Leader of the House to say so.

Propping up a false equilibrium is not a viable option in the long run. What is going to happen after next May if Stormont remains suspended? It may be that the London/Dublin condominium will have been reasonably successful and may become entrenched and in some way acceptable to general opinion. Given the zero-sum nature of Northern Irish politics that leads to inevitable impasse too regularly for democracy to prevail, perhaps a condominium arrangement is Pareto-optimal, as the economists say. In other words, there may be enough of a trade-off for there to be something in it for everyone. At a pinch one could live with that.

However, as a passionate believer in representative parliamentary democracy, my preference would be for the restoration of Stormont with fresh elections next May at the latest. If that means the DUP and Sinn Fein become the main parties, so be it. The people will have spoken. They should be given a voice. I do not think it is beyond the bounds of possibility or ingenuity that the DUP and Sinn Fein could contrive a working modus operandi. After all, the day-to-day working of the Executive has not been impeded by widely differing political viewpoints around the table. If such a deal proved to be impossible, the London-Dublin condominium could prevail. Will the Leader of the House confirm unequivocally that elections will take place in May at the latest? The Statement says that they still stand. That is too weak a commitment.

We on the Liberal Democrat benches will support the suspension of devolution with a heavy heart and because it seems to be the only realistic option available at present. But the future may be fraught.

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Minds must now be concentrated among the parties and between the two Governments in broad and imaginative ways to get devolution back on track.

7 p.m.

Lord Williams of Mostyn: My Lords, I am grateful to the noble Lords, Lord Glentoran and Lord Smith, for their comments. In different ways they have both said that, four and a half years on, this is a sad day. It is, but it is a set-back; it is not a catastrophe. It is a blemish; it is not a terminus. I entirely agree with what the noble Lord, Lord Glentoran, said: devolution will always be the most responsive—and therefore the most appropriate—method for the governance of Northern Ireland.

I must gently chide the noble Lord, Lord Glentoran, on one thing, if I may. I think that it is well known to your Lordships that I asked my right honourable friend the Prime Minister if I might speak on Northern Ireland matters in this House. I hope that all of your Lordships—of whom there are many with different views and different backgrounds—with an interest in Northern Ireland feel that we have worked co-operatively together over a long time. I invited my right honourable friend Dr. Reid to allow me to continue to do that work. In no sense has he slighted this House by responding to my invitation. Of course, that may not be entirely to the satisfaction of all of your Lordships, but if blame there is, it is mine, not that of Dr. Reid.

The noble Lord, Lord Glentoran, asked what had brought about the suspension. There is no doubt that its proximate cause was the fact of the activity in the Northern Ireland Office and the discovery of what had been taken from there. We must be careful, because several people have been charged—there may be more; I do not know—who are entitled to a trial not bedevilled by allegations or assertions that may be the subject of criminal proceedings.

It is not a landscape wholly painted in sepia tones of gloom. It is as well to remind ourselves that we have all previously agreed that sometimes in Northern Ireland there are the dual disadvantages of too short and too long a memory. Since the peace process started, we have had the lowest troop levels in 30 years and 102 cross-border roads have been opened. Living standards, measured by the number of dwellings, have risen by 6,000 since last year. Jobs rose from 557,000 in June 1994 to 656,000 in June 2002—the highest employment figure on record for June. Unemployment fell by 62 per cent between April 1994 and April 2000. There has been the record of the fastest economic growth in the United Kingdom.

Devolved government has delivered a good deal. Tourism has increased to 1.6 million in 2000, compared to fewer than 500,000 in 1976. There is the new high-speed ferry service to Scotland, the new terminal at Belfast city airport—which is an exceptionally friendly airport that works a good deal better than Heathrow, if I may say so sotto voce. The Belfast-Dublin rail service has been upgraded; the M3 Lagan bridge has been opened, as has the Newry bypass and the new Foyle bridge.

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A great success has been the police board. As he said in his Statement, the Secretary of State has asked all 19 members to retake their responsibilities. Two of them have been uncontactable because they are abroad—I do not know whether they have been in Spain. The 17 who have responded have responded positively and will resume their functions.

Those are not bad achievements. Too short a memory? On 24th July, Dr. Reid made it perfectly plain that, as the Prime Minister and the Taoiseach have made plain on innumerable occasions, no one can ride both horses if one is violence and the other is democracy. No Secretary of State could have been plainer than that.

I turn to one or two questions of ignoble detail asked by the noble Lord, Lord Smith of Clifton. First, he asked: what about the salaries? The Secretary of State has said that salaries will be reduced with effect from next month to the levels that applied before the Assembly took powers. The effect is that salaries will fall by about a quarter. Representatives will for the time being function as constituency representatives and will receive some pay and allowances, but, to take the point made by the noble Lord, the Secretary of State has recognised that that cannot continue without review. If necessary, the Secretary of State will need to review that at the end of the year—which, of course, is not far away.

To state that the May elections still stand is not a weak way to put our position, and I stand by that.

The other questions asked relate to joint rule, to which the noble Lord, Lord Smith referred as the Dublin-Westminster condominium. He is a braver man than I. There is no question of joint rule; it features nowhere in the agreement and is not in the Government's thinking.

We want, after as brief a period of suspension as possible, to return to an Assembly that was working. It was working a good deal better than many of us had expected. It was a salutary, object lesson to go there to see what was happening. It was by no means perfect. I spent a day there during the summer talking to those of reasonably disparate views—starting the day with Mitchel McLauglin and finishing it with the Rev. Dr. Paisley. One way or another, that Assembly was working. We should not be too gloomy.

7.7 p.m.

Lord Rogan: My Lords, perhaps I may remind the noble and learned Lord, the Lord Privy Seal, and your Lordships' House of the Statement that he delivered to this House on 24th July at column 409. He said:

    "In reviewing the cease-fires, I will give particular weight to any substantiated information that a paramilitary organisation is engaged in training, targeting, acquisition or development of arms or weapons, or any similar preparations for a terrorist campaign in Northern Ireland or elsewhere. I say to the House—lest there be any doubt on the matter—that I will not hesitate to use the powers Parliament has given me if the circumstances require it".—[Official Report, 24/7/02; col. 409.]

Given the events of the past two weeks, with the arrest of four Republican activists on suspicion of involvement in spying against the Government—our

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Government—at the very heart of the Northern Ireland Office, how can the Government justify their failure to exclude Sinn Fein/IRA Ministers from the Northern Ireland Executive?

Why have the Government decided, by suspending the political institutions, to punish all of the people of Northern Ireland, rather than those who are at fault? Have the Government considered the possibility that, by taking what some might describe as the easier option, they have risked dealing a final and fatal blow to Unionist confidence in the agreement itself?

On a practical level, as the duration of direct rule is open-ended, can the Government reassure us that the development of various projects, especially capital projects in areas such as health and education, will continue?

7.9 p.m.

Lord Williams of Mostyn: My Lords, I remember repeating the Statement on 24th July and there have undoubtedly been setbacks since then. Since 1st January 2002, 40 assaults and 47 shootings have been attributed to Republicans. Since the same date, attributable to loyalists have been 77 assaults—almost double that number—and 93 shootings, which is about double that number. So we need here to have a context that is not limited to the failings of one set of law-breakers or another. The noble Lord, Lord Glentoran, mentioned four-and-half years. It is a long time if you are living somewhere in deeply unsatisfactory circumstances. However, I respectfully point out that it is a short time within which to have accomplished what has undoubtedly been accomplished.

The noble Lord, Lord Rogan, made a very good point in his final remarks. He seeks my assurance that development projects and capital inflows, especially on health and education, will not cease. As my noble friend Lord Graham said, the Secretary of State has chosen two admirable Ministers who are both energetic and committed. Of course we want those capital inflows to continue. But external capital, international capital, will continue to go into Northern Ireland only if there is some prospect of hope towards a resumption of a democratic, devolved assembly. I do not believe that it was the easier option. It was the more scrupulous option. The option that Dr Reid and the Prime Minister took is best calculated to bring about what everyone wants; namely, a developing, increasingly stable democracy in Northern Ireland.

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