Recommendation 2

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)