Source · Select Committees · Northern Ireland Affairs Committee
Recommendation 12
12
Acknowledged
Paragraph: 76
Reduced UK public spending negatively impacts Northern Ireland's block grant and Barnett formula allocations.
Conclusion
Decisions by UK Governments to reduce overall UK public spending have a significant impact on the funding Northern Ireland receives through the block grant, which makes up the vast majority of its expenditure. With tighter budgets in England, annual allocations to Northern Ireland under the Barnett formula have been squeezed.
Government Response Summary
The government acknowledges Northern Ireland's unique financial challenges and higher relative need, referencing ongoing discussions towards a full fiscal framework and existing structural changes like the 24% needs-based factor in the Barnett formula.
Paragraph Reference:
76
Government Response
Acknowledged
HM Government
Acknowledged
The previous Government agreed an interim Fiscal Framework with the Northern Ireland Executive to ensure the long-term sustainability and health of Northern Ireland’s public finances. We have committed to taking forward these discussions towards a full framework. The Chief Secretary to the Treasury and the Minister of Finance have agreed that the next phase of discussions can begin. I am confident that HM Treasury and the Department of Finance will consider a range of options to ensure Northern Ireland has the correct tools to ensure financial sustainability and effective public service delivery. We acknowledge that Northern Ireland faces unique challenges. The independent Northern Ireland Fiscal Council has calculated that the relative need in Northern Ireland is 24% more per head than the rest of the UK for equivalent spending. This includes the higher costs of, amongst others, delivering policing and justice in NI. We recognise that higher relative need requires higher relative funding for the Northern Ireland Executive, and the UK Government has delivered that. We have also made a structural change to Executive funding by adding a 24% needs-based factor to the Barnett formula to ensure the Executive gets the level of funding it needs. Additionally, and in line with the interim fiscal framework, this Government is committed to considering a review of the relative need if multiple independent and credible sources provide evidence that relative need is different to 124%.