Debate contribution: Autumn Budget

Debate contribution by Mr John O'Dowd on 1 December 2025.

MLA

Mr John O'Dowd

Party at the time

Sinn Féin

Date

1 December 2025

Type

Debate contribution (made as a minister)

Business

Ministerial Statements

Heading

Autumn Budget

Assembly identifier

Official Report component 5268651

Read the official Assembly record

Text

Go raibh maith agat, a Cheann Comhairle.

Thank you for the opportunity to update Members on the implications of last week's autumn Budget for our public finances and our society. I have been clear, inside and outside the House, that delivering quality public services and creating conditions for economic growth are key priorities for me. Ahead of the Chancellor's Budget, my consistent message to the Westminster Government was that we needed a Budget that supported workers, families and small- and medium-sized businesses. I welcome the removal of the two-child limit, which will help to lift thousands of children here out of poverty. That was the right, if not long overdue, decision to make. I also welcome the Chancellor's decision to increase both the minimum wage and the living wage. Those important steps will support our lowest-paid workers. However, the Chancellor's decision to freeze income thresholds will impose an additional tax burden on thousands of workers and their families. That will limit their ability to cope with the rising costs of living and reduce their spend in local businesses. I am disappointed that there was not more support in the Budget for businesses. That was a missed opportunity to allow us to grow and support our local economy. The Chancellor has neither gone far enough to invest in our stretched public services nor taken steps to support economic growth. I will outline today what the Budget means for our public finances, the impact of the tax measures that were announced and my next steps as Finance Minister to support our public finances and public services in the time ahead. First, I will turn to our public finances. While I welcome the additional £370 million of Barnett funding that was announced, the Chancellor could, and should, have gone further. The allocation provides some £240 million for day-to-day spending over the four years from 2025-26 to 2028-29 and £130 million for capital investment over four years from 2026-27 to 2029-2030. While that may sound like a substantial allocation, the reality is that, when taken over the four-year Budget period, it falls far short of what is needed. The additional funding that has been provided will not undo the damage that has been caused by years of British Government underfunding of our public services and is insufficient to plug current and future funding gaps. It is unquestionable that our public services are facing increased demand and increased pressures, with increased costs to deliver the services that people rely on. The announcement provides just £18·8 million in 2025-26. While I anticipate that Westminster’s spring Supplementary Estimates will provide some modest additional funding uplifts for 2025-26, the exact amount remains uncertain. What is clear, however, is that it will not come close to addressing the level of pressures that the Executive are facing this year. Each Minister must strive to improve efficiency in the delivery of our public services, ensuring that every pound of funding delivers maximum value. All Departments must continue to take all necessary actions to manage their overcommitments and to reduce any overspends in this financial year. The measures that have been announced will result in the British Government’s tax take rising to an all-time high. Yet, despite the Budget resulting in an additional £26 billion being raised by 2029-2030, it is extremely disappointing how little additional funding is being provided to the Executive. For public services to be delivered, you need tax income. I am not arguing against collecting tax revenue, but it must be done in a fair and equitable way. Those with the broadest shoulders should carry the biggest tax burden. I do not think that the Chancellor has got that right in this Budget. The Chancellor’s decision to freeze income tax and National Insurance contribution thresholds until 2030-31 represents a stealth tax, which will impact on workers and their families. Since income tax thresholds were first frozen in April 2021, thousands of low-paid workers have been dragged into paying tax for the first time, while others have been pulled into higher tax bands. As a result of the measures in the Budget, the Institute for Fiscal Studies has said that, in 2030-31, a basic-rate taxpayer will pay £220 more tax a year, while a higher-rate taxpayer will be charged £600 more a year. That freeze could also affect our pensioners. Pensioners who have income in addition to the state pension could pay more tax as a result of threshold freezes. The Westminster Government’s decision to cap National Insurance contributions on salary sacrifices into pension schemes will also hit workers. The Treasury’s own analysis shows that the cap is expected to affect more than a quarter of basic-rate taxpayers who are using the scheme. The Chancellor also made a number of changes across a suite of other taxes, including increasing tax rates on dividends, property and savings income; an increase in duties on gaming and betting; and a new electric vehicle excise duty, among other measures. Unfortunately, the Chancellor has missed the opportunity to improve the tax system through measures that had been called for locally and, in particular, by not changing the rate of VAT for our local hospitality sector. In the South, hospitality VAT is currently 13·5%, and the Irish Government have announced that, from July 2026, it will reduce to 9%. That will only increase the existing disparity that is already faced by our local sector. A reduction in the VAT rate is crucial so that hospitality businesses here can compete on a level playing field in the all-Ireland economy. The Westminster Government have also failed to make significant improvements to the application of inheritance tax on our local farming community. While the Chancellor has announced that the £1 million threshold for the family-farm tax will be transferable between spouses, that is, in my view, insufficient to protect our family-farming sector. Nor did the Chancellor take the opportunity of the Budget to address the lack of resource funding for the local growth fund, which enables the community and voluntary sector to support those who are furthest from the labour market to get back into work. That is a key barrier to economic growth here. I have consistently made the point to the Westminster Government that taxes should be fair, proportionate and progressive, with those with the broadest shoulders carrying the greatest burden. In my view, this Budget represents a missed opportunity to make the tax system more progressive, to significantly increase investment in public services and to deliver the stimulus that is necessary for our economy.

Instead, it primarily feathers the nest for the headroom that, the Chancellor thinks, is needed within the fiscal rules that she set, all to appease the financial markets.

In my view, the Budget is another illustration of why we need greater powers locally to ensure that our tax system takes account of our circumstances. Having greater fiscal powers would allow us to make different choices, to change behaviours, to spur economic activity or to generate income for public services in a fairer and more progressive way. My Department will intensify work to progress a full fiscal framework that will include consideration of additional tax powers. I am fully aware that Members will have different views on that, but I believe that we can work together and use the evidence base provided by the independent Fiscal Commission to agree where greater control over fiscal powers could deliver real benefits. While I would have wanted a different outcome from the Budget, it gives us funding certainty. I will shortly bring forward a multi-year Budget for Executive agreement, one that will shape our public services for the years ahead. That will give Departments the certainty that they need to plan for the longer term and make much-needed transformational change in the delivery of our public services, despite the Chancellor's not providing the investment required to accelerate the pace of change. The multi-year Budget will, of course, present challenges, not least because the quantum of funding falls short of what we had hoped for. As I said last week, this is one of the biggest decisions that the Executive and the Assembly will make between now and the end of the mandate, and it is important that we get it right. We need to be realistic. There is not sufficient funding to do all that we would want to do or to provide any Department with the level of funding that it will have requested. Agreeing a multi-year Budget in a mandatory coalition will mean that there will have to be give and take on all sides. The statement has provided Members with an overview of the implications of the autumn Budget. While additional funding for public services is always welcome, it must be viewed in the context of a marginal increase only, with demand and the cost of delivering services exponentially rising. While there are elements in the Chancellor’s statement to be welcomed, the Chancellor has neither gone far enough to invest in public services nor helped to boost our economy. The autumn Budget falls far short of what is needed to support the delivery of front-line public services. While the autumn Budget presents challenges to us as an Executive, there is no doubt in my mind that, by working in partnership, we will be better placed to meet those challenges head-on. I stand ready to play my part in supporting workers, families and businesses, first and foremost by putting forward a multi-year Budget that is focused on doing what matters most.

1,588 words. Text as published by the Northern Ireland Assembly.

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Assessed 21 October 2026 at 14:02 UTC by jev-1.13.0 (requested as typesafe/jev) under rubric 2026.10-r9, methodology 1.9.

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