The UK government has offered a £2.5bn financial package to support the return of devolution in Northern Ireland – including funding for public sector pay rises.
Northern Ireland secretary Chris Heaton-Harris made the pledge at a summit with Stormont's five main political parties yesterday.
The proposed funding, which is dependent on a return to power sharing in Northern Ireland, includes a lump sum to settle public sector pay claims and a new "needs-based" funding formula for public services.
Last month, Neil Gibson, the permanent secretary at the Department of Finance, warned that Northern Ireland was headed for a £450m overspend, rising to £1bn if public servants are to receive a “a fair and reasonable” pay rise. His warning came after the head of the Northern Ireland Civil Service, Jayne Brady, said this summer that an overspend was “unavoidable” because of the power vacuum in Stormont.
The settlement would include a “stabilising fund” for the next four years, which would give the Northern Ireland Executive access to additional cash; extend the two-year deadline to pay back a budget overspend to five years; and give the executive power to redirect money earmarked for projects to be redirected to transforming public services.
But to secure the funding, the executive would have to commit to revenue-raising plans by next spring, as well as setting up a Public Services Transformation Board.
Departments began consultation this autumn on a series of measures to raise revenue to make up for the budget shortfall, including raising tuition fees, charging for drug prescriptions and at-home care and a U-turn on plans to scrap hospital car-parking charges.
When he instructed permanent secretaries to begin the consultations in September, Heaton-Harris said the Northern Ireland Office would also be reviewing the level of property taxes, known as the domestic and non-domestic regional rate.
It is understood that the NIO's proposed package would also require rates to rise by 15%.
Power sharing collapsed in early 2022 when the Democratic Unionist Party walked out due to disagreements over the Northern Ireland Protocol. The offer is intended in part to put pressure on the DUP to return to the table.
However, DUP leader Sir Jeffrey Donaldson said that while the offer was a “first step”, negotiations would not be completed in “a few days here”.
“I think it puts on the table an offer that begins to address some of the issues that are at the heart of the shortfall in our budgetary arrangements,” he told reporters outside Hillsborough Castle, the Northern Ireland secretary’s official residence in County Down, where the talks are being held.
“Does it go far enough? No. Is more work required? Yes it is.”
Alliance Party leader Naomi Long meanwhile called for a longer-term solution, saying: “For us this is not about a short-term fix, it is not about dangling baubles at us before Christmas and getting everybody to rush back and say that this will be resolved immediately.
“The DUP have had 18 months to mull over the minutiae of the Windsor Framework and the changes they want to it.
“This is much more important in terms of Northern Ireland’s long-term sustainability and so we need to ensure that as much detail and attention is paid to the detail of this deal and to the finances around this deal as has been paid to any other part of it.”
Ahead of the roundtable yesterday, Heaton-Harris said he would not provide a “running commentary” on the negotiations.
“I want to agree the basis upon which the Northern Ireland Executive can return on a stable financial footing. I also want to ensure that public services are able to meet the needs of the people of Northern Ireland,” he said.
“The UK government is willing to help, but all these issues can best be addressed by the return of locally accountable institutions built on secure foundations.
“And I hope our work together over the next few days will do exactly that.”
'Resilient' civil servants deserve 'a pay award worthy of their efforts'
Writing for CSW this week, Brady said civil servants have "demonstrated incredible professional resilience" this year in the absence of a functioning executive.
"Despite – or perhaps because of – these tests, we asked even more of our people, who continued to deliver their best for those we serve. This included achieving groundbreaking innovation to improve service delivery," she wrote.
"It would be wrong of me to ask more of them next year without getting the fundamentals right, including a pay award worthy of their efforts. This means building resilience and people-centredness into our structures in a way that benefits not just civil servants, but our economy, society, environment," she added.