Committee for Finance - Report on the 2025-26 Draft Executive Budget
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This report is the property of the Committee for Finance.
Neither the report nor its contents should be disclosed to any person unless such disclosure is authorised by the Committee.
Ordered by the Committee for Finance to be published 26 March 2025.
Report: NIA 86/22-27 Committee for Finance.
Contents
Powers and Membership
Powers
The Committee for Finance is a Statutory Departmental Committee established in accordance with paragraphs 8 and 9 of Strand One of the Belfast Agreement and under Assembly Standing Order No 48. The Committee has a scrutiny, policy development and consultation role with respect to the Department of Finance and has a role in the initiation of legislation.
The Committee has power to:
- consider and advise on Departmental budgets and Annual Plans in the context of the overall budget allocation;
- approve relevant secondary legislation and take the Committee Stage of relevant primary legislation;
- call for persons and papers;
- initiate enquiries and make reports; and
- consider and advise on matters brought to the Committee by the Minister of Finance
Membership
The Committee has 9 members, including a Chairperson and Deputy Chairperson, and a quorum of five members. The membership of the Committee is as follows:
- Mr Matthew O'Toole MLA (Chairperson)
- Ms Diane Forsythe MLA (Deputy Chairperson)
- Dr Steve Aiken OBE MLA
- Mr Phillip Brett MLA
- Mr Gerry Carroll MLA
- Miss Jemma Dolan MLA 1
- Mr Paul Frew MLA
- Miss Deirdre Hargey MLA
- Mr Eóin Tennyson MLA
1 With effect from 11 February 2025 Miss Jemma Dolan replaced Miss Nicola Brogan
Introduction
1. The Northern Ireland Executive agreed its draft Budget for 2025-26 on 19 December 2024. The Minister of Finance launched a consultation on the draft Budget on 19 December 2024 which closed on 13 March 2025.
2. The Chancellor's Autumn Budget on 30 October 2024 increased employers' National Insurance Contributions, adding over £200m to the cost of delivering public services for Departments and central bodies. Departmental officials have indicated to the Committee that it is likely that funding from the UK Government to cover this additional cost will only amount to £140-145m. Neither figure includes the cost associated with staff who deliver family Health Services (GP's, dentists, pharmacists, and so on), and the Independent sector, nor does it include the cost to local councils.
3. The Executive has indicated that its draft Budget has been developed with a focus on Programme for Government (PfG) priorities; however, there are few linkages between the draft Budget and the PfG. The need to sustain existing services until transformation efforts yield results limits the extent to which funding can be allocated solely based on PfG priorities. Nonetheless, the earmarked allocations for Childcare, Skills, Social Housing, Just Transition, Ending Violence against Women and Girls and Integr8 contribute to PfG priorities.
4. The draft Budget reflects increases to the Domestic Regional Rate of 5% and Non-Domestic Regional Rate by 3%. The proposal on the regional rate element of the bill would add 60p per week for a domestic property at the average value.
5. The UK Treasury has removed the ring-fence on Agricultural Support Funds and provided funding at 2024-25 levels in the Executive's baseline funding for 2025-26. Recognising the importance of the farming community the Executive has agreed that this funding should be provided as an earmarked allocation to the Department for Agriculture, Environment and Rural Affairs. Similarly, the funding previously provided from Treasury as a budget cover transfer for Cyber Security has been included in the Executive's baseline. This funding has now been provided as an earmarked allocation to the Department of Finance (DoF).
6. The Executive's Spending Review outcome for 2025-26 includes Treasury earmarked funding for the Executive Programme on Paramilitarism and Organised Crime, as well as additional security measures, allocated to the Department of Justice. It also includes funding for public sector transformation as part of the Executive Restoration Package - some £129m of this funding has been allocated to six projects by the executive on the recommendation of the Public Sector Transformation Board. Additionally, funding for debt advice, previously allocated in-year to the DfC, is now included as earmarked funding in the draft Budget. Combined with funding for other prior commitments, total earmarked allocations amount to £847.5m.
7. £50m is being held centrally for a Childcare Strategy until the Department for Education brings forward proposals for its use. Additionally, the Executive has agreed to ring-fence funding for three specific issues, reflecting their priority while requiring unused funds to be returned for reallocation. These earmarked allocations include £16.9m for the Department for Communities to support benefit delivery, £2m for The Executive Office to implement Phase 1 of the Strategic Framework addressing ending violence against women and girls, and £7m for the Department for the Economy to support skills interventions.
8. Resource and Capital funding bids significantly exceed the available Budget. No Department received its full request. The Minister has urged ministerial colleagues to prioritise pay settlements in their budget allocations.
Committee Approach
9. The Committee received evidence from departmental officials and the Minister of Finance during the draft Budget process at its meetings of 6 November 2024 and 27 November 2024 respectively.
10. The Committee received oral and written evidence from departmental officials following the publication of the Draft Budget on 15 January, 19 February and 1 April 2025.Papers received from the Department of Finance are in Appendix 3. As has happened in previous years, the Committee agreed to ask the statutory committees of the Northern Ireland Assembly to review the anticipated impact of the 2025-26 Draft Budget proposals on their respective departments. Written submissions received are in Appendix 4.
11. Common themes from the statutory committees include concerns over the lack of a multi-year budget. They indicated that a multi-year budget would assist departments in their long-term planning, especially for larger capital projects.
12. The statutory committees stated that a joined up, cross departmental approach with departmental budgets being linked to the Programme for Government would help link funding decisions to policy outcomes. This would make it easier to assess whether financial allocations are being directed toward the most urgent needs.
13. The statutory committees understand that there is considerable pressure on the public purse and conceded that difficult decisions would need to be made during the challenging fiscal environment.
14. The Committee agreed that a compilation report of all of the relevant evidence (this report) should be published and that this would inform a plenary debate, as has been the practice in previous years.
15. Minutes of Proceedings are at Appendix 1. The Minutes of Evidence are included at Appendix 2. Department of Finance papers are included at Appendix 3. Written submissions from statutory committees are included at Appendix 4. The Northern Ireland Fiscal Council report is at Appendix 5. The draft 2025-26 Budget consultation analysis of responses has not been provided at the time of publication and is not included.
Links to Appendices
Appendix 1: Minutes of Proceedings
View Minutes of Proceedings of Committee meetings related to the report
Appendix 2: Minutes of Evidence
View Minutes of Evidence from evidence sessions related to the report
Appendix 3: Department of Finance Papers
View Papers from the Department of Finance related to the report
Appendix 4: Written submissions
View written submissions received related to the report
