Source · Select Committees · Northern Ireland Affairs Committee
Recommendation 2
2
Deferred
Northern Ireland requires stable, needs-based funding, with potential backdating, for public services.
Recommendation
Northern Ireland must be funded according to its level of need. In the short term, that means in the main by central Government. The previous Government accepted that for every £100 spent on public services in England, it costs £124 to run the equivalent services in Northern Ireland. Opinions differ on whether this 124% uplift in funding a fair and accurate assessment of Northern Ireland’s relative level of need is. There are clearly opportunities for the Executive and service providers to use their current funding more efficiently, as highlighted by the BMA, and through improved data collection. To that end, we welcome the work that Prof. Gerald Holtham is undertaking to make a new, independent assessment of need in Northern Ireland. From the evidence which we have taken, it seems clear that a figure of 124% or 127% will not make a significant difference to Northern Ireland’s public services on its own in the short term, if it is applied in future only to Barnett consequentials. To ensure that Northern Ireland is funded according to need as quickly as possible, and to avoid a potential 35 cliff edge in funding from 2026–27 when the additional one-off funding Northern Ireland received under the 2024 Executive restoration package comes to an end, there is a compelling case for backdating the 124% uplift to the start of the 2021 Spending Review period, and reflecting that in the Block Grant baseline figure for the next. Applying the figure for relative need to the Block Grant year-on-year, without Barnett consequentials, is another option. But, whatever the means, the key objective is to ensure that Northern Ireland is fully funded according to need, through stable, sustainable and predictable allocations, starting with the allocation at the next Spending Review. (Conclusion, Paragraph 40)
Government Response Summary
The government states that Northern Ireland is currently funded above its independently assessed level of need and will receive a large settlement through the Spending Review. It commits to immediately begin negotiations on a full Fiscal Framework to determine long-term, stable, and predictable needs-based funding.
Government Response
Deferred
HM Government
Deferred
The independent Northern Ireland Fiscal Council acknowledges that the Executive has received the funding it needs in recent years through a combination of the block grant, additional UK Government funding packages, and locally generated revenue. The Executive is also funded above its relative level of need for the current financial year due to the commitments of the Executive restoration package. The SR provides £19.3 billion per year on average for the Northern Ireland Executive between 2026–27 and 2028–29. This is the largest settlement in real terms since devolution in 1998. The Northern Ireland Executive will continue to receive over 24% more per person than equivalent UK Government spending in the rest of the UK, which is above their independently assessed level of need. Alongside the SR, the UK Government has published the methodology for calculating Northern Ireland Executive relative funding. This has been jointly agreed with the Northern Ireland Executive. The UK Government and Northern Ireland Executive have also agreed to immediately begin negotiations on a full Northern Ireland Executive Fiscal Framework. The scope of negotiations will include Northern Ireland Housing Executive borrowing and the Holtham Review of Northern Ireland’s relative need also published at the SR. More time is needed to ensure that any further agreement on the long-term fiscal framework for Northern Ireland is robust and will serve the purpose of supporting the fiscal sustainability of Northern Ireland’s public finances.