Treasury Review Identifies £3.3bn Spending Power Potential for Stormont
A comprehensive Treasury analysis has concluded that Stormont ministers could unlock up to £3.3 billion in additional spending power each year through strategic decisions. The Open Book Review of Northern Ireland Executive Budget examined numerous options that could significantly improve the sustainability of Northern Ireland's finances.
Persistent Funding Gap Identified
The report, seen by the Press Association, identifies what it describes as "a persistent gap between Northern Ireland Executive spending and available funding." This gap stems from multiple factors including public service inefficiencies, policy decisions maintaining a large public sector workforce, pay parity with the rest of the UK, and implementation of "super-parity measures" exceeding UK Government policies.
According to the Treasury analysis, if powersharing ministers had pursued "even an eighth" of the available options, they might have avoided a budget overspend in the last financial year. The review focused specifically on spending within the current Northern Ireland budget allocation.
Comparative Spending Analysis Reveals Disparities
The Treasury report provides detailed comparisons between Northern Ireland and England spending patterns. For every £1 the UK Government spends on comparable public services in England, the Northern Ireland Executive has "at least £1.24 to spend" to reflect Northern Ireland's higher levels of relative need.
However, the analysis reveals that for several key departments, funding per head significantly exceeds this 124% benchmark. Health spending per head in Northern Ireland stands at 152% of that in England, policing at 166%, and schools at 140%. Across the entire justice system, spending reaches 120% compared with the rest of the UK.
The report quantifies these disparities:
- Health spending at 124% of comparable English spending would be £1.3 billion lower than current health expenditure
- Education spending at 124% of comparable English spending would be £424 million lower than current education expenditure
Public Sector Pay and Revenue-Raising Opportunities
The Treasury analysis highlights that the Executive spends a higher proportion of Resource Departmental Expenditure Limit (RDEL) on public sector pay than the UK Government. The report states that if the Executive's pay bill was even halfway between current Northern Ireland proportions and UK Government levels, this could realize savings of up to £1.25 billion in RDEL that could be redirected to non-pay public service delivery.
Additionally, the review identifies significant revenue-raising opportunities through policy alignment with other UK regions. Offering lower domestic rates and higher rates relief in Northern Ireland compared to England costs the Executive approximately £639 million annually in foregone revenue, with a further £684 million annually from other measures where the Executive isn't implementing the same fees and charges as the UK Government.
Specific Revenue-Raising Measures Proposed
The Treasury report outlines several specific measures that could generate substantial additional revenue:
- Introducing domestic water charges similar to England and Wales could raise over £357 million annually
- Implementing prescription charges at rates comparable to England could generate more than £24 million
- Removing free bus travel for people aged 60-64 could raise £13 million
- Increasing tuition fees could reduce university sector subsidies, providing up to £237 million additional funding for wider public services
Budget Context and Political Considerations
The financial review comes amid ongoing concerns about Stormont's financial situation, with Northern Ireland's political leaders recently calling for a meeting with Prime Minister Sir Keir Starmer. A budget agreement remains outstanding, adding pressure to already strained departmental finances.
In February, the UK Government announced it would make £400 million available from reserves for the Executive to address overspend pressures in health and education. This funding must be repaid over the next three years, prompting the Treasury's "open-book exercise" examining the Executive budget.
Stormont's Finance Committee was informed last week that the report had been shared with Executive ministers and would be used to "inform discussions" with the Treasury. The Treasury emphasized that the report aims to "inform the Executive's decisions on funding allocations."
Scalable Implementation Approach
The Treasury report emphasizes that the Executive would not need to adopt all proposed options to achieve significant financial improvements. Given the scale of overspends (£467.6 million in 2025-26), the Executive could balance their budget without fully mirroring policies in other UK regions.
The analysis concludes that pursuing even a subset of the outlined options could unlock substantial additional spending power. The report states: "If these options are pursued by the Executive, they would improve the sustainability of the Northern Ireland budget. They could also release significant additional funding to speed up the transformation of public services and improve outcomes for people in Northern Ireland."
Decisions on spending ultimately rest with powersharing Executive ministers who "will want to consider the delivery options and timescales" according to the Treasury's assessment.
