Written Ministerial Statement

The content of this written ministerial statement is as received at the time from the Minister. It has not been subject to the official reporting (Hansard) process.

Department of Finance: Proposed Draft Budget 2026-29/30

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Published at 12:00PM on Tuesday 6 January 2026

Mr O'Dowd (The Minister of Finance): The purpose of this Statement is to inform the Assembly of my proposals for the draft Budget for 2026-29/30, which I intend to publish for public consultation while working in parallel with Executive colleagues to reach agreement on a final Budget.

As the Assembly is currently in recess, I am providing an update to the House by way of a Written Ministerial Statement. Subject to the Speaker's agreement, I intend to deliver an Oral Statement on Monday, 12 January, to allow Members the opportunity to ask questions.

The ongoing under investment in public services by the British Government means that both the Resource and Capital DEL funding position remain extremely constrained. This is particularly the case in 2026-27 where the Resource DEL uplift in the Spending Review was largely offset by the cessation of the £520 million of stabilisation funding provided by the restoration package.

Despite the Autumn Budget announced in Westminster resulting in increased taxes, by amounts rising to £26 billion in 2029-30, it is extremely disappointing how little additional funding is being provided to the Executive.

I welcome the £372.3 million of additional Barnett consequentials announced in the Autumn Budget. While this may sound like a substantial allocation, the reality is, when taken over a four-year period, it falls far short of what is needed. I believe that the Chancellor could and should have gone further.

The additional funding provided will not undo the damage caused by the years of underfunding of our public services by successive British Governments and is insufficient to plug current and future funding gaps.

It is unquestionable that our public services are facing increased demand and increased pressures with increased costs to deliver the services people rely on.

In this context it is simply not possible to provide any department with the funding it has requested. Delivering our Programme for Government priorities will require the Executive collectively, and individual Ministers, to take challenging decisions to prioritise the available funding to deliver the desired outcomes. The need for transformation and consideration of different ways of delivering could not be clearer.

In my view, the Autumn Budget is another illustration of why we need greater powers locally. To ensure our tax system takes account of our circumstances. Having greater fiscal powers would allow us to make different choices, to spur economic activity, or to generate income for public services, in a fairer and more progressive way. As part of this, my department will intensify work to progress a full Fiscal Framework.

In the context of our funding pressures the contribution from the Irish Government through the Shared Island Fund is welcome. I look forward to working with the Irish Government to maximise this.

Multi-Year Budget

By moving beyond short-term cycles, we can enable strategic investment that delivers lasting benefits for our economy, our environment, and our society.

Setting a multi-year budget is one of the biggest decisions we will take during this Assembly mandate. Getting this right is essential.

This draft Budget covers the same period as the Chancellor's Spending Review which provided a three-year funding envelope for Resource DEL, for day-to day spending, from 2026-27 to 2028-29 and four years for Capital DEL, for longer term investment, from 2026-27 to 2029-30.

I am today launching an eight-week consultation to give the public the opportunity to have their say and help shape the future of the services they rely on.

The proposals I am consulting on do not provide the level of funding I would wish to see directed to our public services; instead, they reflect what is possible within the funding available.

Any increase in one area will inevitably mean a reduction in another. In responding to the draft Budget, I ask all Assembly Members that if they believe additional funding should be allocated to a particular area, they also propose clear alternatives identifying where that funding should be reallocated from. It is important that solutions and ideas are put forward. I have made the same request to my Ministerial colleagues.

Any overspend in the current financial year will reduce the funding available in this budget period; however, the exact amount will not be known until the year end. I have asked all Ministerial colleagues to take steps to minimise any overspend, both at individual department and block level. Some Ministers have acted responsibly in this regard. I will continue to work with all Ministers to drive down overspend.

I will also be urging the Treasury to phase any reduction across the entire budget period, given the already constrained 2026-27 position and the damage an immediate cut would cause to public services.

Due to these uncertainties the potential reduction has not been reflected in the proposed draft Budget. It will, however, need to be addressed in either the final Budget or the first monitoring round of 2026-27.

Regional Rates

This draft Budget assumes an increase to the Domestic Regional Rate by 5% and Non-Domestic Regional Rate by 3% for each year across the budget period. These rate increases will provide additional funding for the delivery of essential public services.

Funding allocations

A summary of proposed Resource DEL outcomes is provided in Annex A, with details of proposed earmarked funding set out in Annex B and the outcome excluding these earmarked allocations at Annex C.

Strategic Reserve

Acknowledging that further exceptional costs may crystalise over the budget period, the draft Budget proposes a strategic reserve of £200 million in 2027-28 and £400 million in 2028-29, to meet unforeseen pressures that may arise.

Capital DEL

Details of the proposed capital outcome provided for each department under this draft Budget is set out at Annex D.

There are a number of items which are earmarked by Treasury and by the Executive for specific purposes. These proposed earmarked allocations are set in Annex E.

In addition to the earmarked funding, departments will also be provided with general capital allocations within which Ministers may fund their own priorities.

Financial Transactions Capital

Financial Transaction Capital (FTC) may only be used for loans to, or equity investment in, private sector bodies. The Spending Review provided £91.7 million, £92.6 million, £118.7 million and £140.7 million respectively.

Details of the proposed FTC outcome is set out at Annex F.

Reconciliation Treasury Controls

As required by Section 64 of the NI Act 1998, the funding allocated in this Budget is within the amounts notified by the Secretary of State on 3 October 2025. A table reconciling the allocations to these controls is provided at Annex G.

Autumn Budget

The Autumn Budget provided the Executive with further Resource and Capital Barnett consequentials totalling £353.5 million across the budget period.

Due to the requirements of Section 64 of the NI Act 1998, this funding cannot be included in the published draft Budget position until an updated settlement letter is received from the Secretary of State.

The Executive may however agree to allocate this funding to departments as indicative allocations, proposals for this are set out in Annex H for Resource DEL and Annex I for Capital DEL. If agreed these will be confirmed in the final Budget or during the June Monitoring round.

Conclusion

The consultation will launch shortly on the Department of Finance website and will include a Factsheet. The full draft Budget document will follow later this month.

The Executive now has the opportunity to agree its first multiyear budget in over a decade which would provide departments with the certainty they need to plan for the longer-term, shaping our public services for years to come.

With the agreement of the Speaker, I will go into more detail on my draft Budget proposals in my oral statement to the Assembly upon its return.

I encourage everyone to have their say during the consultation process and help us to work together to develop a multi-year budget that makes the best possible use of the resources available.

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The Executive approves the projects which utilise Treasury Earmarked Transformation Funding

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