Dr Stephen Goss is a freelance historian, lectures in history and politics in London, and is a Conservative councillor in Reading.
A cost-of-living crisis; politicians eager to pander, frantically try to come up with ways to ease it, despite budget constraints and increasing debt. Such could describe most countries today, but Northern Ireland is in a particularly problematic position – one mostly of its politicians’ own making.
Public spending per head is the highest in the United Kingdom. In 2023–24 it stood at £15,400 – compared with £12,600 in England, and approximately £14,500 in Scotland and Wales. Recent Treasury analysis illustrates the point starkly. Per-head spending in several key areas significantly exceeds English levels: health at around 152 per cent, schools at 140 per cent, and policing at 166 per cent. The figures reflect genuine pressures, including higher levels of need. Yet public services remain under sustained pressure. Waiting lists are among the longest in the UK, infrastructure investment is repeatedly delayed, and departments have warned that they cannot meet statutory obligations within existing budgets.
They also reflect structural choices about how services are organised, delivered, and protected from reform. One of the most persistent features of Northern Ireland’s public sector is duplication. In education, healthcare, and local government, parallel structures have been maintained over decades for political and social reasons. For example, the Falls Leisure Centre and Shankill Leisure Centre are 700 yards away from each other – on opposite sides of the Peace Wall. These sorts of choices may once have been necessary given the bitter sectarian division, but today they carry ongoing financial costs.
These structural issues are compounded by weaknesses in the budget process itself. The Northern Ireland Audit Office has repeatedly warned that the absence of multi-year budgets limits departments’ ability to plan, invest, and deliver. The Northern Ireland Assembly’s Public Accounts Committee has highlighted similar concerns. It has pointed to siloed decision-making, weak co-ordination across departments, and the lack of a clear link between spending and strategic outcomes. Taken together, these weaknesses mean that even when funding is available, it is not always used effectively. The problem is not just how much is spent, but how little discipline governs that spending.
This leaves Northern Ireland in an uncomfortable position. It is, by UK standards, well-funded. Yet it struggles to convert that funding into effective services. That tension is why repeated appeals for additional money fail to resolve the underlying problems. Stormont’s latest calls for further Treasury support follow a familiar script. Financial pressure builds, ministers warn of service collapse, and negotiations with Westminster begin. The language changes: ‘cost-of-living crisis’, ‘stabilisation’, ‘exceptional pressures’ –but the pattern does not.
At the centre of this system is the Barnett Formula. It is the mechanism HM Treasury uses to determine how the budgets of the devolved administrations change annually. Introduced in 1978 by Joel Barnett, Chief Secretary to the Treasury in James Callaghan government, it was never intended to be a permanent arrangement. It was devised as a temporary solution to what had become a politically fraught process of funding allocations, particularly in the context of the devolution debates of the late 1970s.
Before the introduction of the formula, funding for Scotland, Wales, and Northern Ireland was largely determined through negotiation between HM Treasury and relevant departments. This process was often opaque and could become contentious. The Barnett Formula replaced that with a ‘rules-based approach’, designed to provide a degree of predictability and to reduce the need for repeated bargaining. Despite its temporary design, it has remained in use for nearly five decades.
The formula does not determine the overall size of Northern Ireland’s budget. Instead, it governs how the block grant (the main transfer of funding from the Government to Stormont) is adjusted each year. The starting point is the budget carried forward from the previous year. The Barnett Formula is then applied to changes in Government spending on services in England that are devolved, such as health, education, and transport. When the Government increases or decreases spending on a service in England, a corresponding change to the block grants of the devolved administrations is made. If spending on health or education rises in England, they receive a population-based share of that increase. If it falls, the grant is reduced accordingly. What the formula does not do is reassess need. It does not ask whether Northern Ireland’s spending is efficient, nor whether it is delivering value. The stability has advantages, but it also allows inefficiencies to persist.
The result is a settlement that is predictable but not necessarily sustainable. The Northern Ireland Executive will receive over £19 billion per year 2026–9, and will continue to receive over 24 per cent more per person than equivalent Government spending in the rest of the UK. The problem, in other words, is not simply the level of funding, but the structure it supports.
Stormont operates with limited responsibility for raising the money it spends. The Northern Ireland Executive controls almost £9 in every £10 of public spending, yet raises less than £1 in every £20 of the tax revenue behind it. Beyond household and business rates, it has virtually no meaningful tax-varying powers, a position that sets it apart from the Scottish and Welsh Governments, both of which have greater, if still limited, fiscal autonomy. The consequences are predictable: spending increases carry political rewards; raising revenue carries political cost. The gap (and blame) is filled by HM Treasury.
In the heady yet rocky years post-Agreement when the devolved institutions were finding their feet (and frequently stumbling) the Government was happy to throw money at Northern Ireland if would help keep the process on the road. Over a quarter of a century later, Stormont assumes it can continue to rely on handouts from HM Treasury as a safety net, rather than behave like the responsible, fiscally-minded government it should by now be.
If Northern Ireland is to move beyond its current position, it needs more than another funding package. It needs a different approach to governing its finances. First, the Executive must adopt credible multi-year budgeting. Without it, long-term reform will continue to be side-tracked by short-term pressures. Second, spending baselines need to be scrutinised rigorously. Maintaining existing structures without question is no longer sustainable. Third, public service reform must move from aspiration to implementation. The current set-up is clearly unaffordable even at relatively high levels of funding. Avoiding reform does not protect services, it is undermining them. Finally, the Executive should set out a clear and transparent revenue strategy. This is not a call for tax powers and blanket rises. It is a call for honesty: if Stormont choose lower rates, waiving water charges, or more generous services, it must also explain how it will actually fund them.
The gap between what is promised and what can be delivered is now visible in every delayed project, every overstretched service, and every emergency negotiation with HM Treasury. The system is under strain; the question is whether Stormont is prepared to change it. As George Bernard Shaw observed, ‘the reasonable man adapts himself to the world: the unreasonable one persists in trying to adapt the world to himself’. Northern Ireland’s finances reflect a system that has too often assumed the latter.
The longer that assumption holds, the harder the long overdue adjustment will become.