Source · Select Committees · Northern Ireland Affairs Committee
Recommendation 13
13
Accepted in Part
Include review of needs-based Barnett factor calculation in Fiscal Framework negotiations terms of reference.
Recommendation
We endorse calls for a review of the fiscal framework for Northern Ireland and welcome the willingness of the Government to open negotiations with the Executive in this regard. However it is deeply regrettable, because of the failure to baseline the new needs-based Barnett factor as if it had been in place at the point public spending in Northern Ireland fell below assessed need–April 2022–that the new formula will operate as a fiscal ceiling, rather than as a floor, slowly lifting Northern Ireland’s funding to a point below which it should never have been permitted to fall in the first place. A review of the exact calculation and assessment of the needs-based factor should be included as part of the terms of reference for the upcoming Fiscal Framework negotiations between the Government and Northern Ireland Executive. (Paragraph 77) 38 The funding and delivery of public services in Northern Ireland Alternative ways of raising revenue in Northern Ireland
Government Response Summary
The government commits to taking forward discussions towards a full fiscal framework and will consider a review of the relative needs-based factor if multiple independent and credible sources provide evidence that the current assessment is different. This falls short of including the review as an automatic part of the terms of reference.
Government Response
Accepted in Part
HM Government
Accepted in Part
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%.