New bid to agree Stormont budget at castle talks

A fresh attempt will be made to agree a Stormont budget on Thursday as the local parties meet government ministers at Hillsborough Castle.

There had been hope that Stormont could agree a multi-year budget in January for the first time in more than 10 years, but that did not happen.

Public services in Northern Ireland have been operating with contingency budgets since the start of the financial year in April.

Senior officials have warned that some services will face cuts if a budget is not agreed by the end of this month. Local ministers said they needed more funding from central government before they could reach agreement.

The Secretary of State, Hilary Benn, invited the Northern Ireland Executive parties to the castle for talks.

The chief secretary to the Treasury, Lucy Rigby MP, is attending.

She is the Treasury minister responsible for dealing with the UK's devolved governments.

A spokesperson for Benn said he had been "engaging regularly with the Northern Ireland Executive regarding its failure to agree a multi-year budget".

They added that the purpose of the meeting was to "discuss the exact scale of the financial pressures the executive is facing, and to offer support to enable them to agree a budget".

They say they need more money to be able to agree a viable budget which can deal with financial pressures, such as public sector pay deals.

Their main argument is that Northern Ireland is under-funded in comparison to Scotland and Wales.

They have received some support for that position from the NI Fiscal Council, an independent budget watchdog.

Last month the council found that Scotland and Wales were currently funded above their levels of assessed need while Northern Ireland was at or slightly below its assessed funding need.

It said it was "mathematically possible" that Stormont could get between £1bn and £3.5bn extra per year if it was funded like the other devolved administrations.

However it warned that extra funding to this level was "only one of the options available to Treasury, and it does not seem the most likely".

The Treasury recently completed an "open book" review of Stormont's finances.

It was conducted after the executive overspent by £400m last year.

It pointed to a range of areas where local ministers could make decisions to raise more money or cut costs.

It said there could be up to £3bn a year extra to spend on public services if ministers increased rates, introduced water charges and made thousands of workers redundant.

It suggested that if the civil service was cut back to the equivalent size of the service in England it would save almost £400m a year.

However, it added that this example was "illustrative" and did not account for all caveats.

The review was controversial and the Fiscal Council questioned some of the specific conclusions.

The tone of the review suggests that the Treasury would expect Stormont to agree to some reforms in return for any additional funding.

Stormont departments have spending pressures of up to £1.6bn this financial year, a tax and spending watchdog has warned.

"Pressures" refers to the gap between what departments say they need and what is available.

Pressures do not automatically become overspends as departments can attempt to manage them through efficiencies, postponing projects or getting additional funding.

The NI Fiscal Council said that Stormont departments have identified a shortfall of "around £1.4–£1.6bn" even after considering "significant efficiency and savings measures."

The Finance Minister, Sinn Féin's John O'Dowd, sent his budget proposals to executive colleagues on Christmas Eve before releasing them for public consultation in early January.

The hope was that Stormont could agree a multi-year budget for the first time in more than 10 years.

O'Dowd said: "A multi-year budget provides the opportunity to give departments the certainty they need for long-term planning and create the conditions to drive transformational change."

However, the draft was rejected by other parties with the deputy first minister, the Democratic Unionist Party (DUP)'s Emma Little Pengelly, describing it as "deeply flawed".

Sinn Féin later reached consensus with the other parties that more money would be needed from Westminster before a budget could be passed.

Speaking on Good Morning Ulster, O'Dowd said there was a "substantial gap between what is available to me to distribute and what the needs and pressures are on those departments".

He said that while "Scotland and Wales are funded significantly above their need", NI is funded below its need.

O'Dowd called for fairness and sustainability as well as change.

"We already raise substantial revenue through our rates system" but there are options for revenue raising, he said.

However he said "household water charges are off the table".

The Social Democratic and Labour Party (SDLP) leader at Stormont, Matthew O'Toole, said the "seriousness of our budget chaos can't be overstated".

He added that key programmes were already being delayed or cancelled and people would soon be laid off.

"These talks have to lead to concrete progress on a budget and not simply window dressing," O'Toole said.

Speaking on Good Morning Ulster, he said: "There is an issue around how NI is funded but it is reinforced by dysfunction and mismanagement at Stormont and all of the executive parties are responsible for it".

DUP Leader Gavin Robinson told The Nolan Show the meetings must focus on structural change.

"When it comes to revenue raising it's not sufficient to keep pouring more and more money, whether it's raised here or from London, into a bucket that is full of holes.

"If political parties aren't able to engage in the discussion around public sector reform, around indicating where savings can be made then it won't succeed. We need political agreement and it will require conditional Treasury support for that to happen," he added.

Speaking as he arrived for talks, Ulster Unionist Party (UUP) Leader Jon Burrows said before the public should be asked to pay more, the executive needed to "cut waste".

He said he could not say how long this negotiation process could take but said it should have started "months ago".

Alliance leader Naomi Long said Thursday's meetings could not just be a case of a "white knight riding in with a cheque book".

She said that was not a formula for sustainability, and added there was "unity of purpose" between the parties about demanding a fairer funding settlement.

She said even when a new prime minister took over, the advice from Treasury officials would remain, adding that if it was Andy Burnham, she would hope he would understand the challenges facing Northern Ireland.