Debate contribution: Budget 2026-29/2030: Reports

Debate contribution by Mr John O'Dowd on 11 May 2026.

MLA

Mr John O'Dowd

Party at the time

Sinn Féin

Date

11 May 2026

Type

Debate contribution (made as a minister)

Business

Committee Business

Heading

Budget 2026-29/2030: Reports

Assembly identifier

Official Report component 5524130

Read the official Assembly record

Text

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

I welcome the opportunity to respond to the motion and to engage with the detailed scrutiny undertaken by the Committee for Finance as well as the independent analysis provided by the Fiscal Council. Both reports offer a clear and, at times, stark assessment of the financial position facing our public services over the coming Budget period. It is essential that the debate begins with honesty about the context in which the draft Budget was prepared. I have been clear that my proposals in the draft Budget have been developed against an exceptionally constrained financial position and do not provide the level of funding that I would wish to see directed towards public services. Public services here have experienced spending decisions taken by successive British Governments that have imposed austerity and prolonged fiscal restraint, resulting in underinvestment and rising demand. The cost-of-living crisis is not some abstract slogan or media headline; it is a daily experience for many families who see their earnings being stretched to breaking point. That is why the British Government must change course. They must properly fund public services and support workers and families against the rising tide of the cost of living. If the election results in England, Scotland and Wales have told us anything over the past number of days, it is that it is not only us blaming the Brits; the Brits are fed up with it as well. There needs to be a change of direction from the Government. The days of austerity must come to an end, and there must be proper investment in public finances that allows public services to deliver the services that people need and investment in the economy. People here pay their fair share of taxes to London. They do not get a fair return. While the most recent spending review provided the Executive with an opportunity to set their first multi-year Budget in a decade, the funding that it provided falls short of the level of need in our society. Independent analysis considered by the Committee reinforces what I have consistently said: the pressures that we face are the result of long-standing structural underfunding. The funding settlement does not adequately reflect patterns of ill health, economic inactivity or the real cost of delivering services. Real terms erosion is closely linked to the Government's tax and spending decisions. I take issue with Mr Aiken's analysis of the open-book review. The Treasury did not find £3·5 billion of efficiencies; it found £3·5 billion of extra taxes for the people here to pay. If Mr Aiken is now advocating that the people whom he represents should pay £3·5 billion extra in taxes, he should say that clearly but should not hide behind the open-book review. The open-book review did not find that, and neither did the authors of the report claim to find that. Continued underinvestment by the Government means that both resource and capital DEL remain highly constrained. While the interim fiscal framework has prevented funding from falling below the 124% level of need, evidence has shown that we are not funded fairly or favourably when compared with Wales and Scotland. Analysis shows that Wales is funded some eight percentage points above its estimated level of need of 115% and that Scotland is funded some 20 percentage points above its estimated level of need of 105%. Where is the fairness in that? The challenge that we face is not lack of ambition or commitment by those who deliver public services. The answer is not to tax hard-working families and small and medium-sized businesses more. We have a funding framework that does not reflect reality. That is why I continue to make the case to the Government that we need to be fairly funded so that we can deliver the services that workers and families here rightly expect and deserve. I agree with the Committee and the Fiscal Council that the publication of a multi-year Budget is a necessary and important step forward. It enables Departments to move beyond short-term supports, allows for more responsible workforce planning, provides greater certainty for capital investment and creates better conditions for transformation. However, the evidence also makes it clear that multi-year budgeting alone does not resolve deep-rooted fiscal challenges. The underlying underfunding must be addressed. Achieving a sustainable multi-year Budget requires both collective responsibility in the Executive and continued engagement with London to press for a fairer funding settlement that reflects need and the real cost of delivering public services and supporting the economy. In recent years, pressures have been managed through exceptional and short-term Treasury interventions. They have not addressed the underlying causes of financial instability. The repayment of the £400 million reserve claim over the coming years adds further pressures, particularly in 2026-27, the most challenging year of the Budget period. Analysis by the Committee made it clear that recurring overspends increasingly reflect the gap between service expectations and available funding rather than simple failures of financial control. Relying indefinitely on emergency support undermines financial discipline, weakens long-term planning and erodes public confidence. That is why fair and sustainable funding is essential. Without a settlement that reflects need and the real cost of delivering public services it is not possible to restore credibility, realism and control to our public finances. Evidence presented to the Committee consistently indicates that public services in their current form are not sustainable within existing resources. The need for transformation is central to my draft Budget proposals. I fully recognise the scale of the challenge and pressures that all Departments and Ministers face. There remains a significant, unsustainable gap between our ambition and the resources at our disposal. Addressing that disparity so that we can provide sustainable services into the future will require adequate funding from London for public services as well as the substantive reform and meaningful transformation of how we design and deliver public services. That must include a relentless focus on driving efficiencies, responsibly generating additional income in a fair and equitable way and being open to new and innovative approaches to delivering outcomes. My response to Mr Kingston's point about what I am doing to drive efficiencies in the Executive is that, in the draft Budget, I gave a sense of direction to my Executive colleagues on how they can support efficiencies in their Departments and help themselves. My draft Budget states that any Department raising additional finance will be allowed to keep it up to the value of £20 million. I said that Departments that sell off unneeded buildings and other capital assets can keep the proceeds of that up to £20 million. However, there is a responsibility on every Minister to understand their budget and how their budget and public services are being delivered. Where they see inefficiencies, they should drive them out of the system, not only in their core Department but in their arm's-length bodies. Transformation will, at its core, mean changing how we work so that services become more effective, more resilient and more sustainable. That means designing services around citizens, not organisational structures; cutting duplication and unnecessary complexity; planning our workforce better so that skills are used where they add most value; using data wisely to guide decisions and support early action; focusing on prevention, not just managing demand; and making sure that every pound that we spend delivers the greatest possible impact. That kind of reform is not optional; it is good government. The Executive recognise the need for transformational change across many public services and the need to fund that transformational journey. As demand has grown, particularly among the most vulnerable, due to the cost-of-living crisis, so has the cost of delivering the services that our people rightly expect and deserve. Transformation will not remove the need for difficult decisions, nor will it happen overnight, but it is essential if we are to protect public services, support staff and secure best value for public money in the years ahead. Scrutiny has highlighted significant pressures arising from workforce size and pay. Those working in public services deliver vital support in demanding circumstances, and fair pay and decent conditions are essential to maintaining stable and effective services. The pressures that the Executive face cannot be resolved by unilateral cuts or by asking workers to absorb the cost of underfunding. Long-term solutions require engagement, workforce planning rooted in need and reform of the funding settlement itself. Rightly, the Committee and others highlight the constraints on capital investment in the absence of an agreed investment strategy. Years of underinvestment have left significant infrastructure deficits across Departments, such as those in transport, water, public buildings and community facilities. Without a clear and agreed strategy, capital investment risks becoming fragmented and reactive rather than aligned to economic recovery, regional balance and climate objectives. Evidence from Statutory Committees highlights the issue that budgets are increasingly dominated by fixed and statutory costs, leaving little flexibility to respond to rising demand.

Committees have raised serious concerns about health services, justice outcomes, infrastructure maintenance and support for vulnerable communities. I will be clear: protecting those most in need and defending public services remains a core priority. The evidence also makes clear, however, that incremental reductions and across-the-board savings have reached their limit.

The draft Budget includes modest revenue-raising measures, including regional rate increases that the Executive have collectively agreed. Those measures contribute to funding public services and should not be dismissed. As the Fiscal Council and others have made clear, however, local revenue alone cannot bridge the scale of the funding gap facing the region. Analysis presented to the Committee has cautioned against overstating the potential of local revenue raising and against making simplistic comparisons with other jurisdictions that fail to reflect differences in wages, tax yield and service responsibilities. Those differences place clear limits on what local revenue can deliver. Revenue-raising decisions must therefore be considered alongside transformation, efficiency and the need for a fairer funding settlement. No honest discussion of the Budget can ignore the role of decisions taken by successive British Governments. I have pressed and continue to press the Government for fair funding for public services to enable us to provide the services that our citizens need and deserve. The funding settlement applied to this region has failed to keep pace with the levels of need, the legacy of underinvestment and the real cost of delivering public services. The independent analysis before the Committee supports and strengthens the case that I have made repeatedly: current funding arrangements fall short of what is required to support our public services sustainably. We will continue to press for a funding model that is transparent, fair and grounded in need rather than in crisis management.

I will in one second. That engagement, however, must be underpinned by credibility on our part through realistic budgeting, disciplined delivery and Executive leadership.

The Executive shared a paper with the Treasury last week. There was official engagement this morning. There will be further engagement, I hope, throughout this week. I hope to meet the Secretary of State the following week. The Government have matters of concern of their own at the moment that, I assume, that they are dealing with, but we have been engaging proactively with them. I would like to see the matter resolved as quickly as possible. I agree that we need a multi-year Budget. Others have pushed us to agree a Budget now, but we should not do that. We should continue discussions with the British Government. The time will quickly come, however, when the Executive and Assembly will have to make decisions on a Budget. I would like to see that happen in circumstances of enhanced, increased and proper funding from the British Government. That will not mean that I and other Ministers will not have very difficult decisions to make. We will have such decisions to make, but there is still scope for continued engagement with the Government in the short time ahead. Once again, I remind those listening that hard-working families and small to medium-sized businesses here pay their fair share of taxes but are not seeing a fair return from London. The reports before us do not offer easy answers, because there are no easy answers. They confirm that the pressures in 2026-27 are severe and that continuing as we have done in the past is not an option: I agree. The task before us is to protect public services, defend fairness, pursue reform with purpose and secure a funding settlement that genuinely reflects need and enables long-term stability. The choices ahead are difficult, but failing to confront them will come at a far greater cost to public services, workers and the people whom we serve. I therefore welcome the motion, acknowledge the reports that it references and reaffirm my commitment to giving full and due regard to their findings, as we work towards a fairer and more sustainable financial future.

Sorry, may I come in on that point quickly?

I meant to touch on that during my address: apologies. I understand that there is a letter in my office from the Clerk of the Committee requesting those letters. I have agreed to their being issued.

2,202 words. Text as published by the Northern Ireland Assembly.

Assessment

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Assessed 21 October 2026 at 15:38 UTC by jev-1.13.0 (requested as typesafe/jev) under rubric 2026.10-r9, methodology 1.9.

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