Deadline to pass without Stormont budget deal

Stormont officials will have legal powers to spend up to 95% of last year's funding from Saturday, as a deadline passes without an Executive budget.

The automatic limit is triggered at the end of July under public finance laws if a budget has not been agreed.

In theory, it will cap departmental spending at 5% below last year's level.

In practice, actual 5% cuts are highly unlikely, as the Northern Ireland secretary can ultimately step in and pass a budget through Westminster.

That scenario unfolded in both November 2017 and November 2022 during previous political deadlocks.

It will nonetheless make the management of public finances more difficult as officials will be uncertain about exactly how much is available to spend.

Executive ministers are continuing to push the Treasury for additional funding they say is needed to deliver a viable budget.

There had been hope that Stormont could agree a multi-year budget in January for the first time in more than 10 years.

That did not happen and a one-year budget was also not agreed.

As a result public services in Northern Ireland have been operating with contingency budgets since the start of the financial year in April.

Stormont ministers say the funding they are set to receive from Westminster is not enough to deal with inescapable 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.

The council found that Scotland and Wales are currently funded above their levels of assessed need while Northern Ireland is 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".

Earlier this month the Stormont parties held a budget meeting with the then Northern Ireland Secretary Hilary Benn and a Treasury minister.

That led to an "agreed a programme of work" that will involve Stormont and Treasury officials looking again at Executive's finances.

A spokesperson for the Department of Finance said: "If no Budget Act is in place by 1 August, the contingency provisions in the Northern Ireland Act 1998 and Government Resources and Accounts Act (NI) 2001 are triggered.

"Under these contingency arrangements, the Department of Finance Permanent Secretary can authorise continued spending, ensuring there is no immediate interruption to the delivery of public services.

"The Department of Finance will continue to monitor departmental spending in the ongoing absence of an agreed Budget.

"These contingency arrangements were previously applied during the 2022-23 financial year."

Meanwhile, the newly-appointed Northern Ireland Secretary Chris Bryant will be in Northern Ireland on Friday for a series of engagements, which include meeting the political parties at Hillsborough Castle.

It is his first visit since he was appointed to the job following Prime Minister Andy Burnham's Cabinet reshuffle earlier this month.

He will also meet representatives of business and industry.

In June, an independent watchdog, the NI Fiscal Council, supported a claim by Stormont ministers that Scotland and Wales are currently funded above their levels of assessed need while Northern Ireland is at or slightly below its assessed funding need.

Finance Minister John O'Dowd said: "The new administration has come into power saying that they're going to do things differently, they want to create change, they want to create prosperity in every postcode.

"Well then there's an opportunity for them here to properly fund the executive and allow executive ministers to get on with delivering public services and supporting our economy."

Sinn Féin's O'Dowd told the BBC's Good Morning Ulster programme: "There is a real commitment around the executive table to getting this matter resolved.

"I await to see what the attitude is of the new administration in Downing Street."

Justice Minister Naomi Long, leader of the Alliance Party, said she was "disappointed" that a budget was not yet agreed but warned her own department needed more funding to protect public safety.

She said the Department of Justice (DoJ) had endured "historic levels of under-funding" which continued to affect policing, prisons, legal aid, courts and probation.

"Our proportional budget strength has declined while demand on the justice system has risen starkly'" Long said, adding this meant the department had to make savings each year.

But she warned the DoJ had now "reached the point where all reasonable options have been exhausted".

Leader of the opposition at Stormont, the SDLP's Matthew O'Toole, said his party will tell Bryant on Friday "that the UK government has a collective responsibility with the executive for ensuring that there's a fair financial settlement and a budget is set".

He added: "At the minute I think we have problems with our devolved financial settlement.

"I think it could improve and I think there are challenges and some of what the executive say in terms of comparing how we're funded with Scotland and Wales is fair enough and not untrue.

"We don't agree with them that the tactic to deal with it is to simply throw your hands up and refuse to set a budget."