Debate contribution: Budget 2026-29/2030

Debate contribution by Mr John O'Dowd on 12 January 2026.

MLA

Mr John O'Dowd

Party at the time

Sinn Féin

Date

12 January 2026

Type

Debate contribution (made as a minister)

Business

Ministerial Statements

Heading

Budget 2026-29/2030

Assembly identifier

Official Report component 5311686

Read the official Assembly record

Text

Go raibh maith agat, a Phríomh-Leas-Cheann Comhairle.

Thank you for the opportunity to make a statement on my proposals for a draft multi-year Budget. This will allow me to expand on the information provided in my written ministerial statement of 6 January and to further inform the consultation that was launched on that day. The consultation will run for eight weeks until 3 March and will inform the Executive’s decision on their Budget. In parallel, I will continue to engage with my Executive colleagues. The spending review in June marked an important step forward, giving the Executive the ability to set the first multi-year Budget in over a decade. It is important that we grasp the opportunity to provide Departments with certainty and the ability to make long-term plans and to enable strategic investment that delivers lasting benefits for our economy, environment and society. The proposals that I have put forward for consultation follow political engagement and have been developed against the backdrop of an exceptionally constrained financial position. They do not provide the level of funding that I would wish to see directed at our public services; instead, they reflect what is possible within the funding that is available. In that context, it has not been possible to provide any Department with the funding that it has requested. The continued underinvestment in our public services by the British Government means that both the resource and capital departmental expenditure limit (DEL) funding available is very constrained over the Budget period. It is extremely disappointing how little additional funding is being provided to the Executive, despite the autumn Budget announced in Westminster resulting in increased taxes by amounts rising to £26 billion in 2029-2030. I welcome the £372·3 million of additional Barnett consequentials announced in the autumn Budget. Whilst it may sound like a substantial allocation, the reality is that, when taken over a five-year period, it falls far short of what is needed. I believe that the Chancellor could and should have gone further. The additional funding provided will not undo the damage caused by years of underfunding of our public services by successive British Governments and is insufficient to plug current and future funding gaps. While the interim fiscal framework has avoided our falling below the 124% level of relative need, the loss of the £520 million stabilisation funding provided in the restoration package means that the uplift from the spending review, particularly in 2026-27, has been largely offset. In the context of our funding pressures, the contribution from the Irish Government through the Shared Island Fund is welcome. I look forward to working with the Irish Government to maximise that. I fully recognise the scale of the challenges and pressures that all Departments and Ministers face. The delivery ambitions of Departments exceed the funding available for resource and capital budgets many times over. There remains a significant and unsustainable gap between our ambitions and the resources at our disposal. Addressing that disparity will require adequate funding from Westminster for public services as well as substantive reform and meaningful transformation in how we design and deliver our public services. That must include a relentless focus on driving efficiency and responsibly generating additional income in a fair and equitable way so that we can provide sustainable services and secure better outcomes for the people whom we serve. I have brought these proposals forward to seek the views of the people who use our services in order to help us to shape a multi-year Budget. Along with the written ministerial statement, I have published a fact sheet on my proposals. This oral statement provides further detail, and I intend to publish the usual draft Budget document later this week. Together, those documents provide the information needed to inform discussions. I am in listening mode, and I want to collaborate in a constructive manner. I want colleagues, citizens, businesses and communities to bring forward suggestions so that we can find solutions and deliver a multi-year Budget that makes the best possible use of the limited resources available. The consultation seeks views on the prioritisation of funding and public service provision. Where there is a belief that additional funding should be allocated to a particular area, that should be accompanied by an explanation of how that should be funded. We need to do things differently. It is important that we are honest about the scale of the challenges facing us. With demand for services outpacing available funding, continuing to do things as we always have done is not an option. The need for transformation and giving consideration to alternative and innovative approaches to service delivery has never been clearer. Each Minister must strive to improve efficiency in how our public services are delivered so that resources can be freed up and reinvested in the services that our citizens depend on. However, government action alone will not be enough. It will require a whole-of-society approach as we work to build a more sustainable system of public services. It is important to acknowledge that improvements will require contributions from all of us. Change is essential if we are to improve our public services and deliver outcomes for everyone. That will require a collective willingness across society to embrace change. That means harnessing technology, adopting innovative ideas and being prepared to consider options for raising additional revenue. The autumn 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 spur economic activity or to generate income from public services in a fair and more progressive way. As part of that, my Department will intensify work to progress a full fiscal framework. While income generation will form part of the wider budgetary sustainability, decisions must be based on the economic and social context and the need to deliver the public services that our citizens expect. You will appreciate that, in developing proposals on the regional rate, I needed to consider a number of conflicting pressures, including those across public services and for businesses and citizens. As I stated, the financial position across the Budget period is extremely constrained, whilst public services are facing increased demand and increased cost to deliver the services that citizens and businesses rely on. In seeking to strike the right balance, therefore, I set the proposed percentage increases to 3% for non-domestic rates and 5% for domestic rates. The proposals that I have put forward on the regional rate mirror what was agreed by the Executive and the Assembly last year. The proposals will generate an additional £250 million over the Budget period. In total, the proposed regional rates will provide £771·6 million, £800·8 million and £830·5 million respectively in each of the three years. That is the case after accounting for reinvestment and reform initiative (RRI) principal repayments, which are a first call on the regional rate. Turning to the detail of my draft Budget proposals, the spending review set the Executive's resource DEL envelopes for 2026-27 to 2028-29 and capital DEL envelopes for a further year to 2029-2030. My draft Budget proposals are for the same period. Starting with resource DEL, which funds day-to-day spending, the Treasury provided £16·3 billion, £16·8 billion and £17·3 billion in each year respectively across the Budget period. That includes Treasury earmarked funding for security, the Executive programme on paramilitarism and organised crime, transformation, the Windsor framework, private schools VAT compensation, and debt advice. The resource DEL available to the Executive once those Treasury-earmarked items are provided for is £16·1 billion, £16·6 billion and £17·1 billion. That is supplemented with funding from the regional rates. Each Department sought additional funding as part of the Budget. As I said, it simply was not possible to provide them with the amount requested. Due to the independent nature of the strategic oversight bodies, the budgets for the Assembly, the Audit Office and the Public Services Ombudsman are approved by the Audit Committee and have the first call on the funding available. After providing funding for departmental baselines, oversight bodies, RRI interest payments and statutory salaries, there remains £1·3 billion, £1·8 billion and £2·3 million to honour previous Executive commitments and provide additional allocations. The previous Executive commitments include areas such as agriculture; agrienvironment; fisheries and rural development; welfare mitigations; historical institutional abuse (HIA); truth recovery; and victims payments. They also include the early learning and childcare strategy, for which £195 million has been proposed to continue supporting working families with childcare costs. Those are set out in more detail in the tables alongside the statement. Meeting those funding commitments leaves £0·5 billion, £0·9 billion and £1·4 billion across the Budget period. However, there are a number of additional commitments that I have suggested for Executive-earmarked funding, reflecting Programme for Government priorities. Again, those are set out in more detail in the accompanying tables, but they include, among other things, £495 million for waiting lists and elective care to continue building on the progress made in helping to get patients the care that they need more quickly; £133·3 million to meet in full PSNI workforce recovery costs; £21 million for skills to help grow the economy; £15 million for Lough Neagh, recognising its importance and our desire to protect it; and £15 million for ending violence against women and girls (EVAWG). Given the Executive’s shared commitment to transforming public services and ensuring long-term stability, it is important to invest beyond the £235 million provided through the restoration package to drive meaningful transformation. I have therefore recommended that the Executive provide £95 million in resource DEL over the three-year period to support projects recommended by the public-sector transformation board (PSTB). I also propose that the Executive create a strategic reserve to help them to respond effectively to any issues that may emerge over the Budget period. My proposals include setting aside £200 million in 2027-28 and £400 million in 2028-29 for that purpose. Funding those items means that there is £114·7 million, £430·9 million and £714·2 million available for general allocation to Departments. As the funding available is so limited in 2026-27, I propose to only provide general allocations to Education, Health, Infrastructure and Justice. Recognising that all Departments will face inflationary pressures, general allocations are provided for all Departments in the subsequent two years. In proposing those general allocations, I considered the bids submitted by each Department, including the potential equality impacts and the Programme for Government information provided. Providing the funding as a general allocation gives Ministers the flexibility to use the funding, along with their baseline funding, in line with their Department's priorities. The autumn Budget provided the Executive with an additional £132 million, £89·3 million and £2·2 million. However, due to the requirements of section 64 of the NI Act 1998, that funding cannot be included at this stage. I anticipate that a settlement letter will be received from the Secretary of State in time for that funding to be included in the final Budget. I have, however, included indicative allocations for that funding in my proposals. As the cost of welfare mitigations will increase across the Budget period due to the removal of the two-child cap, I have proposed funding of £9·4 million, £9·7 million and £2·2 million to the Department for Communities respectively. I have also set aside £10 million in 2026-27 to further enhance support to businesses. I intend to bring forward proposals to the Executive on how that funding could be utilised to enhance support through small business rates relief. I propose that the remaining funding be used to increase departmental general allocations. In developing my proposals, I have not included the impact of any overspend in 2025-26.

That is because we do not yet know what the quantum of any overspend will be. It is also my intention to press Treasury to allow us to repay any overspend over a longer period to minimise the detrimental impact that an immediate reduction would have on public services.

It is essential that our public-service workers are appropriately rewarded. As pay awards reflect ongoing costs, they should not rely on in-year funding that may not be available at the same level in future years. Therefore, the Budget has been prepared on the basis that any appropriate pay awards, including those anticipated from pay review bodies, are factored into each Department's budget plans from the start of the financial year. To ensure that public-sector workers receive the pay awards that they deserve over the Budget period, Departments will need to continue strengthening the efficiency with which public services are delivered. Departments retain full flexibility to determine how best to achieve that, but effective workforce planning and accurate paybill forecasting will be important components of the work. Transformation and reform should also form part of each Department's approach. I encourage Ministers to work closely with their arm's-length bodies to ensure that the same level of care, consistency and good practice is applied across the wider public sector. I turn now to capital. Departmental capital budgets are developed using a zero baseline. The spending review provided funding across a four-year period from 2026-27 to 2029-2030, and my proposals are across the same time frame. Treasury funding in each respective year of the Budget period is supplemented with funding from the Irish Government, giving £2·4 billion, £2·5 billion, £2·5 billion and £2·4 billion respectively across the Budget period. That includes Treasury-earmarked funding for city deals, the Windsor framework, the inclusive futures fund and An Ciste Infheistíochta Gaeilge. As is the case with resource DEL, oversight bodies are allocated funding at the amounts approved by the Audit Committee. Funding those items means that there is £2·3 billion, £2·4 billion, £2·4 billion and £2·3 billion remaining for previous Executive commitments and additional allocations. There are a number of areas in which the Executive have made previous commitments. They include Strule, city and growth deals and flagship projects. Flagship projects include £1·1 billion for the A5, of which £527 million is being provided by the Irish Government. The development of the western transport corridor will not only enhance connectivity and accessibility across the region but, most importantly, provide a much safer route for all who travel it. The current road has brought heartbreak to far too many families. There is £526·8 million for the mother and children's hospital — a major healthcare infrastructure project that will see the creation of a new regional children’s hospital and a new maternity hospital, both on the Royal Victoria Hospital site. Recognising the power of sport for community well-being, £101·5 million has been proposed for the redevelopment of Casement Park and £67·1 million for the subregional stadia to further modernise our grassroots sporting facilities. I also propose the provision of £21·5 million for Windsor Park and £12·6 million for the Affidea Stadium to ensure that our stadia act as focal points for our communities, now and in the future, and to make sure that we can host events that draw in international audiences. Full details are set out in the tables alongside the statement. In addition, I have recommended areas for earmarked allocations. They include the medical school at Magee, the special educational needs estate, NI Water, social housing and transformation. After allocating funding to those areas, £1·8 billion, £1·7 billion, £1·6 billion and £1·7 billion remain, which I have provided to Departments as general allocations, thus providing Ministers with the flexibility to prioritise resources in line with their departmental objectives and needs. That funding is supplemented by borrowing under the reinvestment and reform initiative. I propose borrowing the full amount available and using it for strategic purposes. I therefore propose that funding of £231·5 million, £236·2 million, £240·6 million and £245·1 million is provided for investment in NI Water, the schools estate and social housing. That brings the total funding earmarked for water infrastructure and social homes to £433·7 million and £441·7 million, which will help unlock capacity and enable the construction of new homes and businesses and investment in the building of new social housing. As with resource funding, the autumn Budget provided additional capital funding of £9·7 million, £83·9 million, £1·6 million and £34·8 million across the Budget period, but that funding can be allocated only indicatively at this stage. I have recommended using the funding to provide further general allocations to Departments. Financial transactions capital (FTC) has been provided on a net basis, meaning that we no longer need to make repayments to the Treasury. My proposals seek Executive agreement to extend that flexibility to Departments, enabling them to recycle FTC receipts rather than surrender them for in-year reallocation. The funding provided for FTC in the spending review exceeds the departmental bids in all years but 2027-28. I have therefore proposed that all bids be fully funded where possible and that allocations in 2027-28 be distributed on a pro-rata basis. Finally, as in previous years, funding for ring-fenced resource DEL, which is for the non-cash costs of depreciation and impairments, will be dealt with through the in-year process. In conclusion, I stand ready to continue to work with my Executive colleagues to support workers, families, communities and businesses by delivering a multi-year Budget. Behind these millions and billions are people and families. A multi-year Budget will help shape our public services for years to come. The Budget process is not just about setting priorities within government; it is about listening to the voices of families, workers and communities to ensure that the decisions that we make reflect the needs and aspirations of the people whom we serve. I encourage everyone to have their say during the consultation process. It is on all of us in the Chamber to work together to improve their lives and opportunities for the future.

2,971 words. Text as published by the Northern Ireland Assembly.

Assessment

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Assessed 21 October 2026 at 14:16 UTC by jev-1.13.0 (requested as typesafe/jev) under rubric 2026.10-r9, methodology 1.9.

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