The Finance Minister and DoF Permanent Secretary attended the Finance Committee on Wednesday this week. Most of the session was about when a Budget would be agreed, the Executive’s requests for more funding from the UK Government, and the implications if a Budget is not settled.
The Finance Minister is continuing to make the case for additional funding to the UK Government, although no meeting has been scheduled with the Treasury yet. The Minister’s main argument for more funding is that Scotland and Wales are financed above their level of need, whereas Northern Ireland is funded only at around its level of need (assuming need here is 124% of England). If NI received the same funding relative to need as Scotland and Wales, the Minister said there would be £3 billion extra per year (compared to Scotland) or £1 billion extra (compared to Wales).
The Minister emphasised that “there needs to be a fairer funding settlement for this place to allow us to move forward to support public services and invest in our economy”. The proposed multi-year budget (based on existing funding) was roundly rejected by Executive ministers as being unsustainable for their departments. The Minister added that just being funded ‘at need’ was not sufficient for investment in transformation to improve public services, since it didn’t leave any headroom.
Agreement of a Budget for NI Depts is being held up until a conclusion of these approaches to the Treasury. There was however an acknowledgement that resolving this issue was not a priority for the UK Govt at present, and it was not clear if and when there would be a response. So that means there is no clear timescale for agreement of a Budget here. The Minister said, “The lack of urgency on the Budget is not from us, it’s from across the water”.
Short-term arrangements are in place to allow Depts to spend in the absence of a Budget. DoF Permanent Secretary can give depts authority to spend up to 95% of last year’s budget. This 95% applies to the total of DEL and AME spending, and is based on the funding allocated at the start of last year (in cash terms and without in-year additions). So 95% of this amount will be considerably less than what would be available to NI Depts if the Executive agreed a Budget. This raises the prospect of Depts not being able to legally spend all the money allocated to NI for this year, drawing into question, for example, the ability to make public sector pay awards.
Obviously the Executive will want to avoid this scenario, and the Minister talked about getting to a ‘crunch point’ where there would need to be a decision about whether to set a Budget based on the current funding allocation (which all Ministers have rejected), or carry on without a Budget knowing that only 95% of the funding allocated to NI could be spent (an even worse outcome). Obviously the hope is that there will be a successful outcome of discussions with the Treasury so that both these scenarios are avoided.
Finally, there has been a complete rejection of the Treasury’s ‘Open Book Review’ (published this week after being leaked at the end of April), which had suggested that up to £3.3 billion of savings could be found in Northern Ireland through a combination of efficiencies and reform, scaling back ‘super parity policies’, reducing the size of the public sector, and more local revenue raising. The Minister said that this analysis was based on incorrect assumptions and unfair comparisons, particularly about spending per head on health.
Four comments from Pivotal:
1. Not having a Budget more than two months into the financial year is a failure of government that undermines financial management and puts public services at serious risk (see our recent Belfast Telegraph article). Neither is there a clear timescale for when a Budget will be agreed. We are a long way from the strategic multi-year budget that was anticipated.
2. Placing all the responsibility for the absence of a Budget on the UK Government is unreasonable and unwise. The Executive should be going to the UK Government with its own plan for what it has done to manage its budget, and how it will ensure its future financial sustainability through, for example, efficiencies, transformation, revenue raising and rationalisation. Any new funding agreement with the UK Govt is bound to contain such conditions, and the Executive would be wise to get on the front foot.
3. The argument for more funding for Northern Ireland has shifted recently from asking to be funded at NI’s level of need, to asking to be funded above our level of need to a similar extent as Scotland and Wales. So “Northern Ireland is under-funded” has taken on a slightly different meaning. Again, the Executive should set out a plan for how it would use any extra funding to improve public services and increase fiscal sustainability.
4. The Open Book Review was a wasted opportunity. It should have been a proper joint exercise that could have given the Executive some helpful ideas and support in its budgetary planning and management. Perhaps it was always doomed to fail, given the Treasury and the Executive had conflicting objectives on what it was going to achieve.
Watch the Finance Committee session here https://niassembly.tv/committee-for-finance-meeting-wednesday-3-june-2026/
