The Budget: How does NI receive its share?

On Wednesday 27 October, the Chancellor of the Exchequer Rishi Sunak will deliver the Autumn Budget alongside the Spending Review, in arguably the most significant fiscal event for the UK Government under the current premiership.

The Budget will outline the state of the economy and the Government’s plans for taxation and spending, with the Spending Review setting out funding for Government departments and public services for the next three financial years.

This will be the first multi-year Spending Review since 2015 – something that has been much welcomed by Stormont Ministers - with the 2019 and 2020 editions only allocating spending for one year each due to the economic uncertainty created by Brexit and the COVID-19 pandemic respectively.

For Northern Ireland, as a devolved region of the UK with limited fiscal powers, the ability to generate any additional revenue by government is minimal, and so we remain very much at the mercy of our overlords in No.11.

Starting with the Block Grant, Northern Ireland receives its allocation of money from Treasury based on a calculation known as the Barnett Consequential in the Chancellor’s Autumn Budget, which this year will take the form of the Spending Review.

The headline allocation forms the basis on which the Finance Minister then engages with other departments and Ministers to form a draft budget, before presenting to the Executive, and then bringing the proposal to the Assembly, committees and the wider public for consultation.

It is anticipated that Finance Minister Conor Murphy will publish a draft budget before the end of 2021, with a new budget in place before the end of the financial year following agreement from the Executive and an Assembly vote.

Locally, revenue generating power are limited to income generated through Regional Rates, which brings in around £740 million for the Executive every year.

Supplementing the budget once in place, monitoring rounds take place in June, January and October and present the opportunity to review spending plans and priorities throughout the year, with money that can’t or won’t be spent to be returned to for reallocation.

Bids are made by departments for additional funding, and this can be a way to top-up funding across public services and bodies, with January Monitoring Round often seeing those who can spend money quickly and under the threshold required for a business case granted any money left at the bottom of the purse. All will be acutely aware of the importance of spending any money rewarded given that the consequences of not doing so could see their budget ultimately reduced – and no one wants that.

Other opportunities for additional funding can come in the form of new government spending announcements in-year that prompt the Barnett Consequential into play. Recent example of this include NI securing a slice of COVID funding from the UK Government across different support schemes, alongside extra spending injections from the government in health and infrastructure.

Critically however, when the issue relates to a matter that isn’t devolved, the money isn’t hypothecated and so it is down to the Executive to determine how and where the money is spent.

For more information on the Budget or to find out more about how Stratagem can help you ensure your organisation is best placed to draw down funds and support your political engagement, get in touch by email for an initial consultation.