Extra £140 million in funding for Northern Ireland in next budget

Northern Ireland will receive £140 million of additional Government funding in the next budget.

Secretary of State Karen Bradley said the funds, which are on top of the £11 billion-plus block grant allocated under the Barnett model for devolved regions, recognised the lack of opportunity for “fundamental service reconfiguration” in the current financial year.

The Government has taken on responsibility for setting Northern Ireland’s annual spending plans in the ongoing absence of devolved ministers due to the collapse of power-sharing at Stormont.

Tabling her plans in a written statement to Parliament, Mrs Bradley said it would not be appropriate for her to take fundamental or strategic spending decisions, insisting those were for locally elected politicians.

She said the budget was instead aimed at securing public services and meeting urgent pressures in health and education and other core frontline services.

“That is what this budget settlement will do, by protecting and preserving public services within challenging fiscal constraints,” she added.

Mrs Bradley said she had “engaged intensively” with the senior civil servants who are currently in charge of running public services in Northern Ireland and had also discussed the budget with the main political parties at Stormont.

Under the budget, the health service is set for a 6% cash increase in resource funding compared to the baseline allocation of 2018-19.

But when inflation is factored in – and the added funds diverted to health during the last 12 months – the uplift for the Department of Health equates to around 2% in real terms.

Education is set for a 3.2% increase compared with the baseline of 2018-19 – but that works out as a 0.7% cut in real terms when inflation and this year’s in-year spending is factored.

Given the size of the health spend – around half of the total Stormont budget – a number of other departments are also facing real terms decreases, with the Executive Office and Department of Finance likely to be hardest hit.

Departments will receive added in-year funding again in the coming financial year, with health and education again likely to be the main beneficiaries of reallocations so the actual year-on-year percentage changes will only be known in April 2020.

Overall, the resource budget in 2019-20 is increasing by 3.8% in cash terms from the 2018-19 baseline – around 2% when inflation is factored in.

Public services will receive £11.35 billion in the coming budget but around £180 million of that has been included to pay for increased employer pension costs across the public sector.

Around £1.5 billion has been allocated for capital projects.

Mrs Bradley said that would provide a platform to progress a number of significant builds, including the York Street motorway interchange in Belfast; the city’s Mother and Children’s Hospital, and the upgrade of the A6 between Belfast and Londonderry.

Stormont will also be given flexibility to transfer £130 million of funds earmarked for capital spending to resourcing day-to-day public services – a move usually not permitted by the Treasury.

It will be allowed to carry forward £85 million of unspent resource funds and £8 million of capital funds from this year to next – sums in excess of the normal limits for transfer.

In terms of the regional rate set by the Government to raise revenue, the domestic rate will increase by 4.79% – 3% in cash terms and 1.79% in inflation.

The business rates will only increase by inflation – 1.79%.

The Government decisions on rates are in line with those taken next year.

The budget also confirmed Northern Ireland will receive £20.4 million in funding to prepare for Brexit, with a further £16.5 million specifically for the police.

In terms of the £1 billion extra funds flowing from the DUP’s confidence and supply deal with the Conservative minority government, £333 million will be spent in 2019-20.

Of that total, £200 million will be spent on infrastructure, £100 million on health service reform, £10 million on mental health services, £20 million on tackling deprivation and £3 million on improving the region’s broadband network.

Of the money diverted to the region as a result of the 2017 Westminster deal, £430 million has already been spent, the majority on health service reform and infrastructure projects.