Northern Ireland Executive to get additional £1.5 billion in new budget announced by Chancellor

Chancellor Rachel Reeves has announced a £1.5 billion package of additional funding for next year’s budget, taking the total to £18.2 billion.

The Northern Ireland Executive receives a flat sum from the Treasury, calculated using the Barnett formula.

The government said next year’s budget is “the largest in real terms in the history of devolution.”

This is the biggest real terms settlement for Northern Ireland since devolution. 

The Northern Ireland Executive will get an additional £640 million in Barnett consequentials this year, and an additional £1.5 billion next year. 

This will provide  a strong foundation for stability and growth, and sees the UK Government delivering real change for the people of Northern Ireland.

We have also confirmed the UK Government’s investment in Northern Ireland’s City and Growth deals, which is a huge boost to communities in both rural and urban areas. The Mid South West and Causeway Coast and Glens Deals alone will receive a combined investment from the UK Government of £162 million, and I look forward to seeing them progress and make a real impact now and in years to come. 

Meanwhile, measures such as the Northern Ireland Enhanced Investment Zone, continuing support for Northern Ireland integrated schooling and the UK-wide investment of over £500m in digital infrastructure through Project Gigabit and the Shared Rural Network benefit people across Northern Ireland’s communities.

The increase to £37.8 million in funding for the Police Service of Northern Ireland through the Additional Security Fund, combined with £8 million for the Executive Programme on Paramilitarism and Organised Crime, underscores the UK Government’s continuing and steadfast commitment to security.

This budget is positive news for people across Northern Ireland, encouraging economic growth and enabling the conditions for a brighter future.

– Hilary Benn MP, Northern Ireland Secretary

Other changes announced by the Chancellor include an increase in the National Minimum Wage, increasing from £11.44 an hour to £12.21 an hour in April for workers aged 21 and over.

Income Tax, National Insurance and VAT are not increasing, meaning that we will not see any higher taxes on our payslips.

However, the Chancellor did announce an increase to Employers’ National Insurance, taking it to 15% from April, expected to raise an additional £25bn per year.

Vitally for Northern Ireland, the Causeway Coast and Glens and Mid South West City Deals will go ahead, with the Government lifting their pause on funding.

Stormont’s Finance Minister, Caoimhe Archibald MLA, has said the budget “will not undo the damage caused by years of underfunding.”

While there appears to be a genuine attempt to protect public services and invest in infrastructure, the harm done by austerity was never going to be reversed by one Budget. I welcome the commitments to capital spending and to the need for the broadest shoulders to carry the heaviest load.

But there is no doubt the taxation increases on business will prove challenging for many small businesses. While the National Insurance employer contribution increase is lower than some had speculated, this will be cold comfort to those businesses impacted.

While this is welcome for our public services, it still won’t address all the pressures departments have identified this year. That means challenging decisions will still have to be made.

Now that we have certainty about our finances for this year, I intend to move quickly to seek agreement with Ministerial colleagues for how the additional funding will be allocated in the next Monitoring Round. Once agreed, each department will have to take action to live within their allocated funding envelopes.

The amount of money involved here reflects the state of public services as I have been pointing out since I took up post. The £431 million of the extra funding we are receiving over these two years for our public services is a result of the Interim Fiscal Framework I negotiated in May.

This equates to a real terms uplift of 1.3% in Resource DEL compared to 2024/25 but given the continued pay and inflationary pressures and growing demands on our services, this still represents challenges for the Executive and highlights the need for transformation of our public services

– Caoimhe Archibald MLA, Finance Minister

Another range of changes announced today includes increased funding to £37.8 million for the Police Service of Northern Ireland’s Additional Security Fund and £8 million for the Executive Programme on Paramilitarism and Organised Crime.