Stormont funding: NI Finance minister has concerns with £113m fundraising plan


NI Finance Minister Caoimhe Archibald has said she has "serious concerns" with a Treasury letter on the £3.3bn financial package for a restored executive.

She said the current offer does not provide a "sustainable solution" to public sector pay demands.

The government is asking the NI Executive to raise a minimum of £113m in additional funds as part of the financial package from the Treasury.

Ms Archibald has criticised this plan.

She said the requirement to raise £113m of additional funds in the next 12 months would "only serve to cause more harm to hard-pressed families, households and businesses".

She also said it was "not acceptable" to make a £559m debt write-off from previous years conditional on the publication and implementation of a sustainability plan.

In a letter responding to the Treasury, she said the executive "should be given time and space to develop and agree a properly thought through sustainability plan that will put our finances on a more stabilised footing".

"It is critical we have the right resources to deliver effective public services for all our citizens," Ms Archibald added.

'Urgent meeting'

"We ask that the British government act in good faith.

"There can be no further damage to our public services."

Caoimhe Archibald
Sinn Féin's Caoimhe Archibald said the current offer does not provide a "sustainable solution" to public sector pay demands

Ms Archibald called for an "urgent meeting" with the Treasury discuss the matter.

The Northern Ireland Office (NIO) said the £113m should be part of a balanced budget for the next financial year and a "plan to deliver sustainable finances".

The first minister has said she had not signed up to revenue raising as part of a £3.3bn deal to restore devolution.

Michelle O'Neill said no party had agreed to measures like water charges.

The £3.3bn Westminster package was said to be conditional on Stormont raising more income through taxes or charges.

Earlier, the Social Democratic and Labour Party (SDLP) said there needs to be transparency on what was agreed between the UK government and the Northern Ireland Executive on revenue raising.

Now, the Treasury has written to Finance Minister Caoimhe Archibald outlining details of the package.

What has the government said about the £3.3bn package?

The NIO said it "contains built-in commitments to ensure progress at pace for the people of Northern Ireland".

This included "publishing and implementing a plan to deliver sustainable finances - including delivery of a balanced budget for 2024-25 by raising a minimum of £113m through locally generated income".

It also involved "publishing a comprehensive and costed long-term strategic infrastructure plan setting out priority areas for action and how it will support prosperity and growth".

"It will be for the Northern Ireland Executive to determine if they will consider a different course of action as part of their sustainability plan to deliver the public services that Northern Ireland needs," it added.

Analysis box by John Campbell, NI economic and business editor
Analysis box by John Campbell, NI economic and business editor

Executive fears 'perverse outcomes'

Executive ministers are arguing that the UK government's proposed new "fiscal framework" for Northern Ireland has the wrong starting point and in its current form will create "perverse outcomes".

The fiscal framework would recognise that it costs more to deliver public services in Northern Ireland than in England.

It would mean that from April for every extra £1 per person spent on public services in England, Northern Ireland would get £1.24 per person.

But crucially, the current proposal would not guarantee that Northern Ireland's total spending allocation would be 124% of England's and would take many years to get to that level.

The executive say that for the fiscal framework to get to the overall 124% funding level, the new arrangement needs to be treated as though it had been in place since 2022 and so was adding to the baseline of Stormont's budget.

The £113m is the figure the government previously estimated could be raised by increasing the regional rate in Northern Ireland by 15%.

Rates are a property tax which help fund public services in Northern Ireland.

Northern Ireland Secretary Chris Heaton-Harris said the package "tackles the immediate budget pressures facing the restored executive and allows it to take action to rapidly stabilise public services, while increasing opportunities for investment and improved infrastructure".

"It also paves the way for vital transformation of public services, and will deliver well-deserved pay awards for public sector workers," he added.

On Tuesday morning, SDLP assembly member Matthew O'Toole, the leader of the opposition at Stormont, said the public needs to know what was agreed.

He added that it was a problem if "this hasn't been nailed down in black and white" or if it was agreed and people "either aren't aware of that or are choosing not to remember it".

Mr O'Toole, who also chairs Stormont's Finance Committee, told BBC's Good Morning Ulster programme that he could not find any written details on the terms of the £3.3bn funding package.

However, he did point to a letter sent to Prime Minister Rishi Sunak last week from all the executive parties, which did mention preparations for revenue raising.

Mr O'Toole said it was an "in-writing commitment that they (the executive parties) will look at it".

What exactly did the letter say?

Stormont's Executive Office released a statement on 5 February which included the "full text of the letter from executive ministers to the prime minister".

That letter stated that officials "will now commence the process of developing a sustainability plan" which it said would include a focus on "additional funding (revenue raising and other sources)" as well as producing financial plans.

It also acknowledges that the government "has committed to writing off existing debts" on the condition that the executive "implements a plan to deliver sustainable public finances and services".

But the parties argued: "It is our strong view that these debts exist primarily due to the underfunding of public services."

The letter, signed by all executive ministers, described the £3.3bn deal as a "short-term solution".

"It is clear that the current financial package, on its own, does not provide the basis for the executive to deliver sustainable public services and public finances," it said.

Analysis box by Enda McClafferty, NI political editor
Analysis box by Enda McClafferty, NI political editor

Revenue raising isn't going away you know.

Like it or not, it will be tied to £3.3bn financial package promised by the government. But we are not sure how tight the ties will be.

That is why Stormont ministers are now playing hardball ahead of the negotiations.

The executive has committed to developing a spending plan, which will include revenue raising but only if "the right level of funding is provided".

But the government will only provide that funding if the executive lays out how it plans to raise revenue.

The Stormont version of a catch 22.

The Executive Office is jointly led by First Minister Michelle O'Neill of Sinn Féin and Deputy First Minister Emma Little-Pengelly from the Democratic Unionist Party (DUP).

Both leaders have stated in recent days that the public should not be asked to pay more for poor or declining public services in Northern Ireland.

Ms O'Neill has called for a new funding model for Northern Ireland and said she was not planning for failure in ongoing negotiations with the government.

Speaking on Good Morning Ulster, her Sinn Féin colleague John O'Dowd said: "I think everyone accepts that while £3.3bn is quite an impressive figure, on the face of it it's not sufficient to deal with public service underfunding we've been facing over the last decade."

Now Minister for Infrastructure, Mr O'Dowd added that the executive was "unanimous" in its intention to go back to the government and the Treasury to discuss "how we properly and sustainably fund the executive moving forward and those discussions are ongoing".

Speaking to BBC's North West Today, DUP assembly member Gary Middleton was asked if his party and others in the executive had agreed to look at revenue raising measures.

"Well no, that is not my understanding," he replied.

"I think what all parties are calling for is a sustainable financial package from Westminster to ensure that we can pay for our public sector workers and those who have been out on strike.

"That we can pay for public services and bring them up to a standard to ensure we have the money to run Northern Ireland. That's what we have signed up for."