From Gavin Robinson <[email protected]>
Subject Do you understand the Barnett Squeeze?
Date December 2, 2023 7:59 AM
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We will always stand with working families and seek to get them fair pay.

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Good morning John

In the last few weeks, Northern Ireland has witnessed teachers, bus drivers, classroom assistants, nurses, allied health professionals and many other public sector workers reluctantly take strike action.

The DUP has argued the case for better pay for public sector workers because their childcare, fuel, food, clothing and mortgage costs have all increased but their pay has remained static.

We will always stand with working families and seek to get them fair pay.

In looking at public sector pay, however, we must look at the root cause of the pay pressures. It is not a lack of political will, rather it is a lack of money.

Pay accounts for over half of public spending in Northern Ireland. When the Treasury fails to invest properly in our public services - as has been the case for many years - frontline workers become collateral damage.

The Northern Ireland Fiscal Council believes we will be funded below need to the tune of £1.2bn by 2025.

More than four years ago when Philip Hammond was the Chancellor of the Exchequer, we were challenging Treasury about how Northern Ireland was funded.

As part of the New Decade New Approach deal in January 2020, we were able to get cross party agreement to establish a body to look at this in greater detail.

In March 2021, the Northern Ireland Fiscal Council was established as a means of bringing greater transparency and scrutiny of Northern Ireland’s finances.

The Council’s first substantive report drew very little attention, despite their alarming conclusions, that for the first time, Northern Ireland’s schools and hospitals were being short-changed. This is because the funding formula used to allocate the UK regional budgets does not take account of ‘need’.

This Party, however, was intrinsically engaged in the detail of these reports and started work to bring matters to a head with the Government.

Wales recognised in 2010 that when the UK Government’s definition of ‘need’ was applied, they were being underfunded to the tune of £400m. It had taken two years work by Gerald Holtham to define ‘need’ and draw this conclusion. Because however of the work undertaken by Gerry Holtham more than 12 years ago, Northern Ireland is in the fortunate position that there is an ‘on the shelf’ solution to our funding dilemma.

In February this year, I started calling publicly for Northern Ireland to take notice of our underfunding and outlined the solution. Since then, almost all the Northern Ireland parties have come on board with our campaign for a better funding deal.

Some have asked me why we need more than England to do the same? To put it simply, the cost of providing public services for a small place is more expensive than a large one. We don’t benefit from economies of scale or critical mass.

To provide the same service as England, we therefore need a disproportionately larger public service and for as long as we just receive 3% of what England needs under the Barnett formula, we won’t have enough.

In 2019/2020 when Royal College of Nurses staged their first strike in their 100-year history, they did so under the banner of pay parity – the consequence of Northern Ireland receiving less, year on year, than their equivalents in England. Nurses raised the issue, but it applies across the board.

During the 2022-2025 Westminster budget cycle, public spending in England is set to grow by 6%, but a stilted 3.6% in NI.

In the next three years, some £2,000 will fall from per household public service expenditure for Northern Ireland in real terms. It should be obvious that we can’t sustain that trajectory.

In 1979, we received 129% of England’s spend per head. Today, it sits at 121%, less than Scotland and the squeeze will continue.

The fact that Stormont is not functioning has absolutely no bearing on the size of our budget. Don’t take my word for it. On 4 September 2023, when presenting the Budget Bill, the Northern Ireland Minister Steve Baker told MPs:

‘‘the sum available in this budget is the same as would have been provided were an Executive in place.’’
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The fundamental problem is how we are funded and that must be resolved or else our police officers, teachers and nurses will continue to struggle to have fair pay.

Firstly, baseline budgets must be capable of meeting assessed need in Northern Ireland. The Welsh solution could be lifted down from the shelf and a funding floor put in place to ensure spending does not and cannot fall below need.

Secondly, additional Treasury support for pay awards cannot be one-off. It must be recurring and ringfenced to ensure commitments to staff can be honoured without becoming a millstone around the neck of Departmental budgets.

Finally, Northern Ireland needs strong and lasting financial foundations, which ensure our public services can be reformed and transformed to the benefit of all and in a way that values and rewards our dedicated frontline staff.

Gavin Robinson MP
DUP Deputy Leader
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