The Northern Irish Executive is funded mainly by 4 sources of money: taxes on income, taxes on the profits of corporations, taxes on the value of land, and a block grant funded by Westminster. It is the latter which I wish to discuss in this blog post.

In March the Chancellor and the finance ministers of Northern Ireland, Scotland and Wales came to an agreement to reform the calculation of the block grant. It was agreed that the Barnett formula would be used to calculate the block grant; and that later there would be another set of negotiations on adjusting the block grant using a deprivation grant. The idea behind a deprivation grant is that the devolved administration needs more money to spend on issues like tackling deprivation because deprivation is higher in the devolved nations. The deprivation grant would work by multiplying the number the Barnett formula gives by a certain factor. So say if the Barnett formula decided that a certain devolved administration should receive a £100 block grant but there was a 110% deprivation grant, then that nation would instead receive a block grant of £110.

Northern Ireland is clearly in need of a deprivation grant. The devolved administrations usually run a surplus in their budget as they are restricted from running a deficit by legislation. The Northern Ireland Act for example states that it is the duty of the Secretary of State for Devolved Affairs to borrow money in the event the Executive runs a budget deficit instead of this being the duty of the Executive which drafts the budget. Despite this, the last budget passed by the Northern Irish Assembly had a £1.3 billion surplus. While this may be tiny compared to many budget deficits worldwide, Northern Ireland usually runs a surplus not a deficit, so this is a relatively large deficit. It shows exactly why the Northern Irish Executive requires funding.

A Labour government would deliver that funding. A Labour Party Devolved Affairs Secretary would open negotiations between themselves, the Chancellor, the Northern Irish finance minister, the Welsh finance minister, and the Scottish Finance Secretary on reforming the calculation of the block grant by applying a deprivation grant. If you voted for me to be your MP, then I would lobby the government to ensure that Northern Ireland receives a fair funding deal from Westminster.

And what if we didn’t? The short answer is, chaos and misery would be inflicted on the Northern Irish people. Social security powers were recently fully devolved to Northern Ireland, and the Executive would not be able to fund it properly. Labour introduced the system of basic income which has cut poverty across Northern Ireland and has helped ensure that everyone has a safety net they can fall back onto should they lose their job, decide to go back to school, leave work to go on parental leave, leave work to go on medical leave, try to interview for a better job, etc. I know how important basic income payments have been to families across Northern Ireland during this cost of living crisis; but basic income may have to be abolished if Northern Ireland didn’t get a fair funding deal as we wouldn’t be able to afford it. Massive investments into Northern Ireland's railway network are currently being delivered, and these investments have made travel on our trains free. If the Northern Irish Executive didn’t get sufficient funding from Westminster, then free train travel may have to go. Spending on buses, social services, policing, tackling the housing crisis, tackling the climate crisis, etc may have to be cut to get rid of the budget deficit.

This underscores exactly why it is important that Northern Ireland gets a fair funding deal from Westminster. It underscores why the Labour Party would push for the negotiation of deprivation grants with the finance ministers of the UK. And it underscores why I, as the MP for Northern Ireland, would push hard to ensure that this deprivation grant is sufficient for Northern Ireland.