PRESS RELEASE : Deal reached on interim Fiscal Framework for Northern Ireland [May 2024]

The press release issued by HM Treasury on 21 May 2024.

Fair deal delivers on commitment made within the Northern Ireland Executive’s restoration financial package.

• UK Government delivers on plan to support sustainable public finances and services in Northern Ireland with boost to capital borrowing powers and long-term security of needs-based funding to come into effect this year.
• Interim framework provides further clarity on delivery of funding within the unprecedented £3.3 billion spending settlement confirmed by the UK Government in February.

The UK Government and Northern Ireland Executive have today, 21 May, reached agreement on an interim Fiscal Framework.

Chief Secretary to the Treasury Laura Trott met with Northern Ireland’s Finance Minister Caoimhe Archibald this afternoon to sign the deal, which represents an early and significant step in realising the commitment towards new funding arrangements for the Northern Ireland Executive and investment in its future – as committed in the UK Government’s Northern Ireland Executive restoration financial package and Safeguarding the Union Command Paper.

The deal gives the Executive greater security in funding public services while enabling investment in infrastructure to grow the economy, driving jobs and opportunity across Northern Ireland.

It is headlined by a new needs-based funding formula which will also mean that Northern Ireland will get a 24% uplift in the Barnett formula if its funding falls short of its relative need per head. It also contains an immediate £20 million boost to the Executive’s annual capital borrowing powers, which will rise in line with inflation from 2025-26 onwards.

Chief Secretary to the Treasury Laura Trott said:

This significant deal will provide the Executive with further certainty and resources to deliver for the people of Northern Ireland.

We’ve moved at speed to deliver our plan to address the most pressing issues facing Northern Ireland’s funding and will continue to work with the Executive to secure a fair and final Fiscal Framework made possible by the strength of our Union.

The text agreed between the two governments today also provides further clarity on the new approach to support stability, prosperity, and sustainable public services in Northern Ireland.

The interim Fiscal Framework sets out progress with other elements of the Executive’s restoration financial package. As part of a commitment for the UK Government to write off £559 million in debts incurred while there was a governance gap, the Northern Ireland Executive agreed to publish a plan to deliver sustainable public finances by August 2024. The scope of this plan has now been agreed with HM Treasury ahead of publication in August.

The Executive is also required to publish a comprehensive and costed long-term Strategic Infrastructure Plan by Autumn 2024. The Framework sets out that the Plan will cover the priority areas for action on infrastructure and how it will support prosperity and growth.

A new Public Service Transformation Board, comprising officials from the Northern Ireland Civil Service and UK Government supported by independent experts will provide approval on £235 million ringfenced funding for the purpose of public sector transformation.

Secretary of State for Northern Ireland, Chris Heaton-Harris, said:

Our priority has always been to support the stability and fiscal sustainability of Northern Ireland through a restored Executive.

Today is a significant moment for Northern Ireland and honours this Government’s commitment to a new fiscal framework. It is an example of the better outcomes that are achieved when the UK Government and the Executive work together.

There’s much work to still be done and we stand ready to support the Executive to deliver on the priorities in both this interim framework, and the financial settlement as swiftly and strategically as possible to ensure the full benefits can be realised.

The UK Government and Northern Ireland Executive have committed to agreeing a final Fiscal Framework. Today’s meeting marked the inaugural Joint Exchequer Committee between the two governments. As was committed to within the Safeguarding the Union Command Paper, this will be the forum for discussions on further tax devolution going forward.

Further information

• All documents connected with the interim agreement on the Northern Ireland Executive’s Fiscal Framework and today’s inaugural Joint Exchequer Committee are available online here.