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Northern Ireland Finances

Volume 627: debated on Wednesday 19 July 2017

When the Assembly dissolved in January, no budget had been set for the Northern Ireland Executive for the 2017-18 financial year. Since the end of March it has fallen to the Permanent Secretary of the Department of Finance to allocate funding to Northern Ireland Departments under powers provided by section 59 of the Northern Ireland Act 1998.

This situation has led to understandable concern and uncertainty among businesses and those relying on public services alike. Since April I have therefore worked closely with the Head of the Northern Ireland Civil Service (NICS), in conjunction with the NICS board, to keep under review how to provide ongoing assurance around the budget in the absence of an Executive.

In the first instance this led, on 24 April, to my written statement to the House setting out an indicative budget position and set of departmental allocations. This sought to enable Permanent Secretaries to plan and prepare to take more detailed decisions on cash allocations.

Disappointingly, we remain without an Executive three months on. While progress has been made in discussions between the parties, resolution has not been reached. The parties have, however, made clear that they remain committed to engaging with each other to agree a basis on which an Executive can be formed. If an agreement is reached, I will move quickly to bring forward the necessary legislation to allow an Executive to meet at the next earliest opportunity.

While it is for the Northern Ireland parties to reach an agreed way forward, the UK Government remain committed to working with them and, as appropriate, the Irish Government to secure the restoration of devolved government as quickly as possible. I will maintain close contact with party leaders and the Irish Government over the coming weeks to seek to consolidate progress and encourage continuing discussions towards a deal.

While agreement remains possible, it is clear that an Executive will not be capable of being formed before the autumn. During that time pressures will continue to build, particularly in health and education services. And so as I set out in my written statement on 11 July, I consider it necessary to provide further clarity to support Northern Ireland Permanent Secretaries in addressing those pressures, maintaining public services and continuing to uphold the commitments arising from the Stormont House and Fresh Start agreements.

With that in mind, I set out below adjusted indicative budget positions and departmental allocations for this year. These include resource and capital funding provided in the spring Budget by the Chancellor, as well as resource and capital funding expected to be available from budget transfers and updated forecasts, subject to final data and the usual HM Treasury approval processes.

The allocations do not include any of the financial support the UK Government would be prepared to make available to Northern Ireland following the agreement between the Conservative Party and the Democratic Unionist Party. This Government recognise the unique challenges faced by Northern Ireland as a result of its distinct history and geographical position. However a restored Executive will need to agree how it wishes to allocate these funds to projects within the priority areas.

As previously, the allocations in the table showed in the attachment do not reflect input from UK Government Ministers on priorities nor do they constrain the future ability of an incoming Executive to adjust its priorities. And it remains for NI civil servants to allocate cash under s59 of the Northern Ireland Act 1998. It is important to acknowledge, however, that as the year progresses the scope for significant changes will become more constrained.

This statement does not replace the ultimate need for a formal budget for Northern Ireland. The exercise of s59 powers cannot be sustained indefinitely. And though the advice I have received from the Head of the NICS is that we have not yet reached that critical point, it is approaching. It should be for a new Executive to make swift decisions on its budget to make use of the spending power available to it.

At the same time we will not forget our ultimate responsibility as a Government to uphold political stability and good governance in Northern Ireland. Accordingly, I reaffirm that the UK Government remain prepared to take forward legislation at Westminster to give authority for the expenditure of Northern Ireland departments should an Executive not be restored in the autumn. If resolution continues to prove intractable beyond that point, we will take further steps to provide the necessary political decision-making in the best interests of everyone in Northern Ireland.

Attachments can be viewed online at: