Debate contribution: Spending Review Outcome: Interim Fiscal Framework Implementation Update and Level of Need Report

Debate contribution by Mr John O'Dowd on 16 June 2025.

MLA

Mr John O'Dowd

Party at the time

Sinn Féin

Date

16 June 2025

Type

Debate contribution (made as a minister)

Business

Ministerial Statements

Heading

Spending Review Outcome: Interim Fiscal Framework Implementation Update and Level of Need Report

Assembly identifier

Official Report component 5010259

Read the official Assembly record

Text

Thank you for the opportunity to update Members today on the implications of last week's spending review announcement on our public finances. As Members will be aware, my predecessor, Dr Caoimhe Archibald, secured a commitment from Treasury in May 2024 to review the approach to funding the Executive at the relevant spending review period. Since then, my officials and I have been in intensive negotiations with Treasury on our relative funding methodology. In January 2025, my Department commissioned Professor Gerry Holtham to conduct an independent review of the North's level of need to support that important work. Last Wednesday saw the outworkings of those negotiations, with the publication of the agreement that was reached between the Executive and the British Government to assess relative funding. I thank Professor Gerry Holtham for his report, which was published last week. It added considerable weight in helping us to make the case to Treasury that the Executive must be funded fairly and sustainably. Professor Holtham's review provided a range of need levels. His estimates include a level of need of 123%, before Agriculture spending is included, and a central estimate of 128%, with Agriculture included. A major factor influencing the funding provided to the Executive was the agreement that I secured from the Treasury to exclude £329 million in Agriculture funding, which was un-ring-fenced and baselined at phase 1 of the spending review from our relative funding calculation. The agreement secured with the Treasury has ensured that we receive a 24% uplift on the additional funding provided by last week's spending review announcement, rather than the lower transitional rate of 5%, which would have otherwise applied. That will provide some £600 million more than the original Treasury position. Without that, the financial cliff edge that I previously warned Members about would have become a reality, resulting in damage to our front-line public services. As a result of negotiations with the Treasury, my predecessor and I have delivered an additional £1·3 billion since the beginning of the mandate. Importantly, the agreement also lays the groundwork for agreeing a full fiscal framework. Discussions on it will begin immediately and will cover a number of areas, including the Holtham review of the Executive's relative need, borrowing powers of the Housing Executive and fiscal devolution. In my view, the spending review represented a missed opportunity to significantly increase investment in public services and deliver the level of economic stimulus that was necessary. However, by setting the resource departmental expenditure limit (DEL) funding envelope for the next three years and capital funding for the next four years, it has provided the Executive with the opportunity to set their first multi-year Budget in over a decade. That will bring funding certainty, enabling Departments to plan on a longer-term basis, and it creates the conditions to drive real transformational change in our public services. Over the three-year resource period, from 2026-27 to 2028-29, the Executive will receive £16·3 billion, £16·8 billion and £17·3 billion respectively. While that includes an additional £3·1 billion in Barnett for day-to-day spending over the three-year period, it must be viewed in the context of rising demand and the increasing cost of delivering public services. For capital, the Executive will receive £2·3 billion in each of the four years covered by the spending review ending in 2029-2030. I believe that there was an opportunity for the Chancellor to have been much more ambitious with capital investment to spur economic growth. The reality is that the Executive will remain financially constrained, particularly in 2026–27, as the biggest uplifts in day-to-day spending power occur in subsequent years. That is why my focus is to ensure that every pound is used wisely and strategically. The Executive will work together to agree a multi-year Budget that aligns with and supports our Programme for Government priorities, focuses on what matters most to our people and delivers tangible improvements that will be felt across society in the years ahead. Beyond the direct financial implications, there were other important announcements. I welcome the British Government's commitment to provide £50 million for Casement Park. That funding brings new momentum to a vital project that will deliver a modern sporting venue for generations to come but will also be an economic driver for the surrounding communities and region. I urge all partners to work together to get Casement built. I stand ready to play my part. I am pleased to confirm that, subject to the final outturn, Treasury has agreed to write off £559 million of debt from the 2024 restoration package. While that should never have been viewed as a debt, that is still a positive outcome that is a direct result of the Executive's hard work in delivering a balanced Budget in 2024-25 and raising the necessary additional revenue by 2025-26. Since taking up the role of Finance Minister, I have said consistently that I will do everything within my power to ensure that our public services are fairly and properly funded. I will continue to work with the Chief Secretary to the Treasury on a full fiscal framework that ensures that the Executive have the appropriate financial tools, borrowing powers and taxation levers to deliver sustainable public finances and high-quality public services for the people whom we serve. While the spending review has not provided the economic stimulus that it could have, I will work with my Executive colleagues to develop a multi-year Budget that supports families, workers and communities.

Do you mean, "What am I doing apart from securing £50 million towards the project?"?

We will start on that basis. It is not a bad basis to start on — securing an additional £50 million for the project. I will work with my Executive colleagues, the GAA and others to ensure that we now move forward and ensure that that project is built and delivered. It will be a huge benefit not only to west Belfast and Belfast but to the entire region.

The papers that we received from the Treasury after the announcement state that the Shared Prosperity Fund will continue at around £46 million a year. The exact delivery mechanism has not yet been fully detailed, and I will continue to engage with both the NIO and the relevant Ministers in Whitehall to ensure that that is delivered in a way that aligns with the Executive priorities in the Programme for Government and that respects the devolution powers for this place and allows the Executive and the Assembly to do their work.

FTC can take a number of forms, and we are continuing to work with the NIO and the Treasury on the form that it will take in regard to Casement. However, I am satisfied that there is £50 million on the table that was not there before. How it will be paid and when it will be repaid is all yet to be worked out, but I am satisfied that the terms, thus far, are satisfactory and will allow the project to move forward.

The welfare reforms do not form part of the discussions on the comprehensive spending review, but I am on record with both the Treasury and the Secretary of State in stating my opposition to those reforms. They will do significant harm to people here. As with other measures that the British Government introduced and now have decided to take a different tack on, I encourage them to take a different tack on their so-called welfare reforms.

As has been indicated, it does not realign.

That was a vital point of discussion with the Treasury, and it was crucial that it either was not included in the funding for relative need or was included in both sides of the equation — one or the other. The fact that it has now been excluded means that our relative funding need is based on the 124% without agriculture in it, which means that, when you join the two together, you are up at around 127% in Barnett consequentials. I think that we have managed to negotiate a good package. Separating those elements has benefited the Executive and therefore will benefit public services.

The details of that are still to be finalised. It will involve the GAA as well, because the stadium belongs to the GAA, and whether the Executive or the Westminster Government take a share in it is a discussion that will have to be had, first and foremost, with the GAA. The fact of the matter remains that there is now £50 million that was not there previously on the table to advance that project.

Engagement between my officials and officials in other Departments is already taking place as to how we move that forward, and we are assisting Departments with their five-year plans and strategies. I hope to bring a multi-year Budget to the Executive in December, have a draft agreed in December and then go out to public consultation. I then intend to bring a final document forward in March, in line with the time frames to which we work. As for next steps with the Treasury, I intend to engage with it and my officials will engage at official level on a full fiscal framework, which will involve fiscal devolution and borrowing powers for the Executive, among other things.

I do not have the figures in front of me that the Member quotes, but I will say this. What police are dealing with in our society has changed over the last number of years, so it is only natural that the funding package will reflect the changes. That is for the better, it has to be said. New challenges arrive, and we saw the challenges at the weekend in relation to street disorder. Professor Holtham looked at policing in his report, and he was satisfied that the Fiscal Council's equation for policing was satisfactory. My officials have approved the business plan forwarded by the PSNI in relation to policing numbers moving forward. I support that in principle, but, as with any public body coming to me seeking further funds, I want to be assured that those further funds will make a crucial difference to front-line public services and that they are doing everything in their power to reduce their costs. Regardless of the title of the public body that comes to me, I ask, "What are you doing to help yourself?", and I will ask the same question when I meet the Justice Minister on policing. The police have asked for an additional £5 million in relation to the cost of the operations to deal with the rioting and street disorder over recent days. As part of the June monitoring round, I will recommend to Executive colleagues that that £5 million request be met in full.

"Yes" is the answer to the second part of your question, although not to your initial statement, it has to be said. Yes, I will continue to engage with the Treasury on the £123 to £128 range in the Holtham report. One of the key outcomes of the negotiations is that the Holtham report remains on the table. The Treasury is still open to engaging on that report, and it is very important that we still have a comprehensive, detailed analysis of our level of need on the table and that the Treasury is still prepared to talk about it.

Would the Member support such a clause being introduced to the other projects that the Executive have funded?

Moving forward, the Executive will have to agree their Budget as part of the three-year budgetary programme; four years for capital. I have no doubt that the need for social and affordable housing will be front and centre in those discussions. I am keen to continue to support the Communities Minister in the delivery of social and affordable housing. I have no doubt that the rest of the Executive are as well.

I have to be careful not to cross into the domain of other Ministers but I will work with the Dublin Government in any regard to ensure continued financial support — indeed, increased financial support — for this place. I will play my part in that.

2,031 words. Text as published by the Northern Ireland Assembly.

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Assessed 21 October 2026 at 12:50 UTC by jev-1.13.0 (requested as typesafe/jev) under rubric 2026.10-r9, methodology 1.9.

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