Source · Select Committees · Northern Ireland Affairs Committee
Recommendation 6
6
Not Addressed
Mandate Government to assess public service funding implications from 2026/27 cliff-edge.
Recommendation
Northern Ireland’s public services, especially in the health, education and justice sectors, are in a poor state after years of political instability, lack of funding and of reform. The additional £520 million per year promised by the Government in 2024/25 and 2025/26 will help to address pressures in the immediate term, as well as public sector pay offers for 2023/24. However, the Northern Ireland Fiscal Council has warned of “an abrupt ‘cliff-edge’ drop in funding” from 2026/27. Given this concern, we invite the Government to set out its assessment of the implications for public services of the expected drop in funding from 2026/27 and the rationale for its decision on the two-year stabilisation funding in response to this report. (Paragraph 38) Funding, reform and absent institutions
Government Response Summary
The government states that budgets for 2026-27 onwards are based on projections and confirms the Executive can plan on being funded at or above 124% of their relative need. It provides general information on the fiscal framework but does not explicitly set out an assessment of the implications of the expected funding drop or the rationale for its two-year stabilisation funding decision as requested.
Government Response
Not Addressed
HM Government
Not Addressed
No budgets for the Devolved Governments, or UK Government departments, have been set for 2026–27 onwards and so any expected drop-off is based on projections. The Interim Fiscal Framework confirms that the Executive can continue to plan on the assumption that they will be funded at or above their 124% level of relative need in future financial years. This is seen through the record settlement of £18.2bn provided to the Executive for 2025/26. The previous Government’s financial package will support the stability of Northern Ireland’s public finances and pave the way for fiscal discipline, greater revenue raising to support the effective delivery of public services, and appropriate governance to help the incoming Executive to deliver stability for the medium term and to create the conditions for long-term sustainability. These are necessary and reasonable safeguards to ensure that the mistakes of the past are not repeated and to secure the health of Northern Ireland’s public finances in the long term. Within this package we have provided the Northern Ireland Executive with £708 million to support public services over five years from 2024–25 to 2028–29. This is comprised of £85 million new funding and removing the ring-fence on £623 million of existing Northern Ireland funding streams. The previous UK Government agreed an interim Fiscal Framework with the Northern Ireland Executive and this Government is committed to taking forward this work to ensure the long-term sustainability and health of Northern Ireland’s public finances. However, the Executive will need to make difficult decisions around transformation and revenue raising to ensure that it has enough income to deliver effective public services.