Source · Select Committees · Northern Ireland Affairs Committee
Recommendation 3
3
Deferred
Backdate Northern Ireland's assessed funding need based on Holtham's independent review.
Recommendation
The Government must engage constructively with the conclusions of Prof. Gerald Holtham’s independent review of Northern Ireland’s level of need in deciding future levels of, and mechanisms for, needs-based funding. In negotiations with the Executive on the final Fiscal Framework, we urge the Government to backdate assessed need to the start of the 2021 Spending Review period, in order to include it in the Block Grant baseline figure for the next Spending Review period—or, alternatively, having acknowledged the shortfall during that Spending Review period, compensate Northern Ireland in future years. (Recommendation, Paragraph 41) Transformation and reform
Government Response Summary
The government states that negotiations on a full Northern Ireland Executive Fiscal Framework, encompassing the Holtham Review, will commence immediately, deferring decisions on backdating assessed need or compensating for past shortfalls. It highlights that NI is currently funded above its independently assessed level of need.
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.