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UK government offers £2.5bn to stabilise Northern Ireland finances

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The UK government has offered Northern Irish political parties a package of measures worth more than £2.5bn over five years to stabilise the region’s finances, conditional on the return of the Stormont executive.

But party leaders, who met Chris Heaton-Harris, Northern Ireland secretary, at Hillsborough on Monday, all said it did not go far enough.

Heaton-Harris said London was “willing to help” with a growing financial crunch in the region, exacerbated by nearly two years of political deadlock which has brought down the power-sharing executive.

That crisis was triggered by the Democratic Unionist party, which has been holding months of separate talks with London to secure changes to the post-Brexit trade deal for Northern Ireland to reinforce the region’s place in the UK and ability to trade with Britain.

Westminster’s offer includes cash to stabilise the Northern Ireland administration’s finances and overhaul strained services, as well as providing money to boost public sector pay this year. It also proposes a fresh assessment of the needs-based formula for the region’s funding.

The UK government could also write off a budgetary overspend that currently amounts to £559mn but this would be conditional on Stormont introducing revenue-raising measures, according to people familiar with the details.

Technical talks on the offer will continue on Tuesday and party leaders are expected to return to Hillsborough on Wednesday.

But any hopes London had of securing a deal that could restore the power-sharing executive by Christmas looked set to be dashed after DUP leader Sir Jeffrey Donaldson said he did not see the process being “corralled into a few days” and that his party was “not afraid to stand our ground”.

“There’s still a way to go,” Donaldson told reporters after the first all-party talks with Heaton-Harris since July.

Sinn Féin, the nationalist party that is the largest in the region, said the offer “doesn’t even touch the surface of what is required”.

Naomi Long, whose Alliance is the third force in the region, said it was “not about dangling baubles before us before Christmas”.

“The quantum of it [the offer] is not sufficient,” she added.

Nearly two years of political crisis in the region has led to catastrophic overspending and swingeing budget cuts imposed by London that the parties say leaves available funding for the region well below what is needed.

Northern Ireland receives a £15bn annual grant from London. Heaton-Harris says the region receives 21 per cent more funding per head than other parts of the UK but spends it inefficiently.

He has already launched public consultations on traditionally unpopular ways to raise more revenue, such as introducing water rates.

Public sector workers protest about pay outside Hillsborough Castle
Public sector workers protest about pay outside Hillsborough Castle © David Young/PA

A group of workers from the Unison union protested outside Hillsborough Castle where the politicians met on Monday. “We have the lowest-paid NHS, social care and teaching staff in the UK,” said Deborah Yapicioz, joint-chair of the union’s health committee.

Unison had been forced to set up food banks for some workers and others were leaving to earn better wages in shops, she added.

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