Stormont: Government offers £2.5bn package for devolution returnon December 11, 2023 at 4:06 pm

The UK government is offering a financial package which, it says, is worth £2.5bn to support the return of devolution in Northern Ireland.

It would include a lump sum to settle public sector pay claims and a new “needs-based” funding formula for public services.

It would also allow overspends from last year and this year to be repaid over five years.

Party leaders have said it is not enough money.

Northern Ireland has been without devolved government since February 2022, when the Democratic Unionist Party (DUP) withdrew support as part of its boycott of post-Brexit rules overseeing trade in and out of Northern Ireland.

Government in Northern Ireland requires the largest unionist and nationalist parties to share power in a coalition government.

Without the DUP’s support, the Northern Ireland Executive collapsed, leading to senior civil servants running government departments instead of ministers.

Westminster’s announcement of a financial package came as Northern Ireland’s five main parties met Northern Ireland Secretary Chris Heaton-Harris for the first roundtable talks since July.

It is understood the government is framing the financial package of £2.5bn as dependent on the return of devolution.

The Northern Ireland Executive would also have to commit to raising rates – the property taxes paid by households and businesses – by at least 15%; commit to publishing a revenue-raising plan by next spring; and establish a Public Services Transformation Board.

The government has briefed Stormont’s main parties on the headline offer with further technical briefings to follow.

Stormont’s Department of Finance has previously said it is facing £580m of public sector pay pressures this year but it is not certain if the government would fully fund that.

A new, long-term funding arrangement would begin in 2024-25 with a top up to the block grant to make sure spending per person in Northern Ireland did not fall below a “fiscal floor”.

This is based on arrangements in Wales where, for every £100 per head spent on public services in England, there is a guaranteed £115 for Wales.

That takes into account the different costs of delivering public services of an equal standard in different parts of the UK.

The independent NI Fiscal Council has produced an assessment of relative need in Northern Ireland which concluded that for every £100 per head spent on public services in England, Northern Ireland needs £124 to deliver services of the same standard.

The government says it would accept that £124 per head funding floor and that this would be worth an additional £785m over five years.

The package would also include a four-year “stabilisation fund” worth £1.125bn.

A second tranche of £600m in funding, a combination of reallocated and new money, could be used for public services transformation.

After multi-party talks with Northern Ireland Secretary Chris Heaton-Harris, political party leaders spoke to the media one by one.

Sinn Féin’s vice-president Michelle O’Neill said the package offered did not “touch the surface of what is required” for properly funded public services and all parties should fight the UK Treasury together.

She said it is now time for the DUP to return to Stormont and called Wednesday – two days from now – “the cut-off point”.

But the DUP leader Sir Jeffrey Donaldson said the secretary of state had not mentioned any deadline, and said his party was committed to getting agreement with the UK government on post-Brexit trading rules as well as finances.

He said: “Our initial reaction is that [the financial package] falls short of what is required”.

The SDLP’s Colum Eastwood said the money offered was not enough to fill the “black hole” in Stormont’s finances, but said “most of the parties were clear that we have to get Stormont back up and running immediately”.

Alliance’s Naomi Long said the money is not enough because it is “not about a short-term fix, it is not about dangling baubles at us before Christmas and getting everybody to rush back”.

The UUP’s Doug Beattie struck a slightly different tone, saying it was enough to “do the pay deal that needs to be done” for public sector workers, but might not be enough in the long term.