Politics

NI parties offered hundreds of millions in extra public spending to return to Stormont

Offer by Chris Heaton-Harris may not be enough to fill budget gap with public sector pay rises due

In the absence of an Executive, the budget for Northern Ireland was set by Northern Secretary Chris Heaton-Harris and there have been shortfalls of millions of pounds across a range of Stormont departments. Photograph: Ben Stansall/AFP/Getty
In the absence of an Executive, the budget for Northern Ireland was set by Northern Secretary Chris Heaton-Harris and there have been shortfalls of millions of pounds across a range of Stormont departments. Photograph: Ben Stansall/AFP/Getty
Mark Hennessy
Mon Dec 11 2023 - 16:00

Northern Ireland’s political parties have been offered hundreds of millions in extra public spending on condition that the Stormont institutions are brought back to life, but the money is unlikely to fill the legislature’s budget gap.

The offer was made by the Northern Ireland Secretary of State Chris Heaton-Harris in talks with the parties that began at lunchtime on Monday at Hillsborough Castle, Co Down. Talks will continue with finance officials on Tuesday and are due to finish on Wednesday.

The package is worth £2.5 billion in once-off and continuing Treasury funding, but it is conditional on Stormont increasing household and business rates by 15 per cent, along with other changes.

Arriving for the Hillsborough meeting, the political leaders, but especially the leader of the Democratic Unionist Party Sir Jeffrey Donaldson, were loudly heckled by protesting public sector workers, including NHS nurses, with chants of “back to work, back to work”.

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Refusing to accept Wednesday as a hard deadline, Mr Donaldson said he wants to see Stormont restored, but it must happen on a basis that will last.

Under the plan, a fully-restored Stormont would get money for a delayed pay rise to public servants. In addition, it would get a guaranteed so-called “fiscal floor” - an extra sum per head of NI’s population compared with England, to compensate for NI’s greater social need. In the past, NI has received up to £1.25, or more, per head for each £1 per person spent on public services spent in England, but this ratio has never been guaranteed. Now, it appears that the Treasury is prepared to offer a £1.24 per head “floor”.

In addition, NI would get a four-year stabilisation fund for reforms and to ease spending pressures, while past overspends would be paid back to the Treasury over five years rather than immediately.

Last year, Stormont overspent by nearly £300m, while the 2023/24 budget is also significantly in the red, too. Minus Stormont ministers, civil servants have made £1 billion worth of cuts, but a £1 billion deficit is still forecast - including £450m for inflation pressures and higher demands for health services from an ageing population. In addition, £550m is overdue for the public pay bill.

The sums on offer from London, which have so far not been spelled out, are “eye watering”, according to the leader of the Official Unionist Party, Doug Beattie, but they do not offer hope that NI’s budget challenges can be dealt with not just for one year, but many, he said.

Echoing that point, Mr Donaldson said the finances of Northern Ireland need “to be dealt with” comprehensively, though the Heaton-Harris offer does put pressure on him from voters increasingly angry about the quality of public services.

In a claim challenged by others, he said the DUP had been the first to seek fundamental NI’s budget reforms, where figures are calculated on the basis of need, rather than on Treasury formulas.

However, Mr Donaldson gave little reason to be believe that a Stormont restoration is now possible ahead of Christmas, despite all of the speculation in recent days.

Mr Beattie was equally downbeat, no longer believing in a pre-Christmas deal.

Speaking after the talks ended, the leader of the Social Democratic Labour Party Colum Eastwood said the Secretary of State’s offer was “an opening gambit” that does not go far enough. Asked, however, if it could break the logjam, Mr Eastwood said “hope is one thing in this place, but confidence is another”.

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Mark Hennessy

Mark Hennessy

Mark Hennessy is Ireland and Britain Editor with The Irish Times