Treasury to give Stormont £400m in a bid to balance department budgets

The Treasury is to make £400m available to the Stormont Executive this year to make sure departments can balance their budgets, the government has said.

Stormont's Finance Minister John O'Dowd had previously estimated an overspend of about that amount, with the greatest pressures in health and education.

The government had previously said the executive needed to live within the means of the existing funding it had received.

But on Wednesday, Northern Ireland Minister Matthew Patrick said the Treasury has granted a one-off reserve claim to protect public services, which will need to be repaid over the next three years.

The Treasury also said it would be conducting an "open book exercise" with the executive on determining its budget, signalling that it will be keeping a closer eye on how Northern Ireland departments are manging their spending.

Finance Minister John O'Dowd confirmed that £214.6m will be allocated to the Department of Education and £185.4m to the Department of Health.

A reserve claim is a call on a Treasury fund that exists to cover unforeseen, unavoidable and unaffordable spending pressures.

It is understood that the Treasury put the offer to the executive at the end of last month.

O'Dowd said the flexibility was welcome but that the money "does not cover" the predicted overspend, therefore work to reduce it needs to continue.

He told BBC News NI that it is not unusual to access a reserve claim and it is "not because of poor management of resources, it is because of the pressures that are coming at us".

O'Dowd said he will continue to engage with the Treasury to ensure the budget is properly financed to "allow us to move forward in a more stable footing and to allow us to meet the growing demand which has come into our public services".

The department said the money will be repayable as £80m in 2026-27, £160m in 2027-28 and £160m in 2028-29.

According to BBC News NI health correspondent Marie-Louise Connolly, the £185.4m for health could go a significant way to alleviate the department's overspend.

At one point last year, its deficit stood at £600m but savings across the six health trusts have brought that down to about £400m - throw in Wednesday's announcement, and you can see the budget thermometer cooling a little more.

Part of the overspend is the public sector pay award made by Health Minister Mike Nesbitt last November.

However, the money is a loan, not a gift, and the health department has three years to repay it.

The health minister had said he will keep trying to make further savings to break even by the end of the financial year on 31 March, and those savings could lead to pain for staff or services.

BBC News NI education correspondent, Robbie Meredith, said the £214.6m allocated to education reflects the rise in the department's budget in recent years, which now sits at over £3bn.

Where education is concerned, it means the department will overspend modestly instead of massively.

The big question is whether the money will need to be paid off by the department or by the whole Stormont Executive?

The department still needs to make savings and this extra money is likely to push some of the education cost cuts and pain further down the road.

Democratic Unionist Party (DUP) leader Gavin Robinson told the House of Commons that through work his party had engaged in the figure of £400m had "doubled and rightly so".

In a statement, he said the funding would provide short-term flexibility but would not "resolve systemic problems".

He said "accountability must sit at the heart of public spending" and called for "root and branch reform within the Civil Service".

Social Democratic and Labour Party (SDLP) MLA Matthew O'Toole, the leader of the opposition at Stormont, said the funding is positive but "given the reserve claim will have to repaid from April onwards, it risks simply pushing the problems into future financial years".

He said it felt like the executive was engaged in one "never-ending credit card balance" and that it was likely this money will be "swallowed into Stormont's black hole".

"It also appears there is no progress on delivering a multi-year budget, which was promised by the executive," he added.

Alliance Party's deputy leader Eóin Tennyson said the funding is "not a silver bullet" and it needs "to be accompanied by meaningful reform to ensure we don't find ourselves in this position again".

"All parties need to get serious about financial management, transformation of public services, and facing up to the scandalous cost of division," he added.

Ulster Unionist finance spokesperson Steve Aiken said the money "isn't such a win as Sinn Féin and its finance minister would pretend it is".

However, he said the "open book" approach from the Treasury, in which they will keep a closer eye on how the money's spent, was a good thing and that he hoped it would bring "discipline" to politicians and senior civil service staff.

In a statement, a UK government spokesperson said it welcomes the executive working together "to balance the Northern Ireland budget from 2026-27, and deliver the changes that public services need to ensure that they work for the people of Northern Ireland, and are sustainable long term".