2022/23 Northern Ireland Budget

23 January 2023 - by Matthew Jackson

The Northern Ireland Budget Bill will be fast-tracked through Parliament today.

Once passed, it will authorise Executive departments and certain other public bodies to incur expenditures and use resources for the financial year ending on 31 March 2023. With Secretary of State, Chris Heaton-Harrs already setting out departmental 2022/23 allocations in a written statement in November, today’s debate is an opportunity for MPs to scrutinise the NIO’s calculations while some parties may seek to amend the Bill.

November’s allocations were set against a backdrop of up to £660 million of overspending in the current financial year, with departments now in the process of trying to identify areas for savings.

Importantly, the Bill also provides for a vote on account to allow those departments and public bodies to continue to deliver public services into the early months of the 2023/24 financial year, approximately 45% of the amount authorised for the previous financial year.

How is NI’s Budget normally set?

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.

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

Following the conclusion of this consultative process, MLAs debate the Bill and vote on it before the end of the financial year.

Will there be any new money allocated today?

It is not anticipated that the Budget will provide any additional pots of money. These normally become available through in-year monitoring rounds conducted by the Department of Finance, spending announcements by the UK Government of which NI receives a share, or specific funds (e.g., Levelling Up Fund which saw 10 projects in NI receive £71 million last week).

The Budget does however form part of a broader conversation regarding local fiscal powers.

Currently, Regional Rates represent the only local means of generating revenue, bringing in around £740 million for the Executive every year. Today’s Budget Bill gives the Secretary of State the power to set the Reginal Rate, a power normally held by the Finance Minister. Chris Heaton-Harris has also indicated that changes to the current arrangements for water charges may also be considered.

The recent NI Fiscal Council report and subsequent consultation by the Department of Finance is an opportunity to shape any future devolution of a suite of taxes, ranging from Corporation Tax to the Apprenticeship Levy. This conversation also includes considerations of changes to the Block Grant, as well as alignment to Executive priorities in areas including economic growth, skills and green growth.

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