\u201cThe overspend this year has been largely driven by decisions to match UK government pay deals [for public sector workers],\u201d said Sir Robert Chote, chair of the independent watchdog. The two departments with the biggest overspends are education and health.<\/p>\n
Budgetary pressures will persist unless Northern Ireland\u2019s Stormont executive takes politically unpalatable action to reduce jobs, ditch pay parity or introduce revenue-raising measures such as water charges<\/a>, he added. <\/p>\n Analysts say that is unlikely: the main parties are vehemently opposed to charging households for water and have an eye on Stormont Assembly elections in May 2027.<\/p>\n Pivotal, a think-tank, estimates the budget hole for 2026-27 could be \u00a3900mn<\/a> if Stormont spending continues at the same rate as this year.<\/p>\n \u201cThe cliff edge [for 2026-27] is better but it hasn\u2019t gone away,\u201d said Fiscal Council member Maureen O\u2019Reilly, presenting an assessment of finance minister John O\u2019Dowd\u2019s draft budget spanning 2026-27 to 2029-30.<\/p>\n While officials in London say Northern Ireland receives more per head than any other part of the UK, local politicians insist the funding is insufficient to match the region\u2019s needs.<\/p>\n Northern Ireland has long failed to make ends meet, relying on repeated bailouts from the UK government \u2014 indeed, 2025-26 is the fourth year in a row that the Treasury has provided extra cash to help balance the books. <\/p>\n But these bailouts are themselves problematic in a region where the National Health Service is buckling<\/a> under the strain of the UK\u2019s worst waiting lists and a lack of cash to invest in water infrastructure<\/a> is hampering housebuilding.<\/p>\n \u201cThe Treasury loan has softened what would otherwise have been a much steeper fall in real spending power next year,\u201d Chote said. \u201cBut repeated exceptional support risks making such interventions appear routine rather than exceptional and may reduce the incentive to address the underlying causes of overspending.\u201d<\/p>\n Jodie Carson, a professor at Ulster University and co-director of its strategic policy unit, went further, calling the practice a \u201cmoral hazard\u201d. <\/p>\n \u201cIt\u2019s not only an absence of incentives we have here, it\u2019s perverse incentives,\u201d she said.<\/p>\n Stormont receives most of its funding from the UK government in the form of an annual block grant, which is at record highs, and receives 24 per cent more per capita than England because it has been assessed as having higher needs due to poverty and the legacy of the Troubles. <\/p>\n The block grant is set to rise to \u00a319.8bn in 2028-29 under the UK\u2019s three-year spending review, from \u00a318.4bn in 2025-26.<\/p>\n But keeping pay parity with England\u2019s public sector workers is difficult since Northern Ireland has a comparatively large public sector workforce. Under the formula for funding Northern Ireland, funding grows in line with population rather than public sector workforce size.<\/p>\n \u201cSo when the UK government agrees, say, a 5 per cent increase in public sector pay in England, the block grant does not rise enough to match that in Northern Ireland,\u201d Chote said.<\/p>\n In any event, O\u2019Dowd\u2019s budget already appears to be in trouble. <\/p>\n The finance minister, from nationalist party Sinn F\u00e9in, has put his proposed package out for a public consultation which runs until March 3 and it would normally be expected to be approved by the end of the month. <\/p>\n But the pro-UK Democratic Unionist Party, the Ulster Unionist Party and the nonaligned Alliance Party, which are Sinn F\u00e9in\u2019s partners in the Stormont executive, have all rejected it, as has the small nationalist opposition party, the Social Democratic and Labour Party.<\/p>\n \u201cIt\u2019s hard, at this stage, to be confident\u2009.\u2009.\u2009. that the executive is going to be able to get agreement on a budget,\u201d Chote said. <\/p>\n","protected":false},"excerpt":{"rendered":"Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this…\n","protected":false},"author":2,"featured_media":443987,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,1294,56,54,55],"class_list":["post-443986","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/443986","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=443986"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/443986\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/443987"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=443986"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=443986"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=443986"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"A](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2026\/02\/https:\/\/d1e00ek4ebabms.cloudfront.net\/production\/2f7da4ac-7b25-4c4f-918b-acb9b6855f27.jpg\")
The National Health Service in Northern Ireland is buckling under the strain of the UK\u2019s worst waiting lists \u00a9 Liam McBurney\/PA<\/p>\n![\"John](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2026\/02\/https:\/\/d1e00ek4ebabms.cloudfront.net\/production\/59a64aaf-02f6-461d-a30c-64bae5cb7b01.jpg\")
Northern Ireland Finance Minister John O\u2019Dowd\u2019s budget appears to already be in trouble \u00a9 Liam McBurney\/Getty Images<\/p>\n