Agreement will deliver an additional £600m for public services – O’Dowd

Date published: 11 June 2025

Speaking following the publication of the methodology agreed for assessing the Executive’s relative funding, Minister O’Dowd said: “Today’s agreement is the culmination of months of intensive and constructive negotiations with Treasury. It will deliver an additional £600 million of funding provided for vital public services here.

“This will enable the Executive to take a long-term strategic approach to public service delivery.

“It helps avoid the potential cliff edge in public funding that could have occurred when the restoration financial package comes to an end and the resulting damage this would have done to frontline public services.”

Professor Holtham’s review provided a range of need levels. His estimates included 123%, before agricultural spending is included, and a central estimate of 128%, with agriculture included.

Treasury has agreed to exclude the £329 million agriculture funding un-ringfenced and baselined at Phase 1 of the Spending Review from the relative funding calculation.  Without this agreement the Executive would have received £600 million less in funding over the Spending Review period.

Thanking Professor Holtham for his report, Minister O’Dowd added: “I thank Professor Gerry Holtham who conducted an independent review of our level of relative need. His report built on the work of the Independent Fiscal Council and added considerable weight in helping us make the case that the Executive must be funded fairly and sustainably.

“The agreement we have reached with Treasury will see us funded above 124% excluding agriculture between 2026-27 and 2028-29. The inclusion of agriculture and non -Barnett funding increases this to 128%.”  

The Relative Funding Methodology published today, agreed between the Treasury and the Executive, means:

• The needs-based adjustment factor of 124% will apply to Barnett consequentials arising from the Spending Review announcement, rather than the lower transitional rate of 5% which would have applied without this update on the Interim Fiscal Framework.
• This has increased funding here by £600 million over the Spending Review period.
• Discussions on the long-term work required for a full Fiscal Framework will begin immediately. This will cover areas including the borrowing powers of the Housing Executive, the Holtham Review of the Executive’s relative need, whether un-ringfenced fisheries funding is in scope of the relative funding calculation and fiscal devolution.

Concluding Minister O’Dowd said: “Since taking up the role of Finance Minister I have consistently said I would do everything in my power to ensure our public services are fairly and properly funded.

“This agreement will see £600 million more for public services over the Spending Review period, providing additional investment in the services that we all rely on and delivers on my commitment to support workers, families and communities. This brings the total additional provided by the needs based adjustment in the Interim Fiscal Framework to £1.3 billion.

“Today is an important step in both providing immediate financial stability and in progressing towards a full fiscal framework that will consider the work of Professor Holtham as part of that process.

“I will continue to engage with the Chief Secretary to the Treasury towards a full Fiscal Framework which ensures the Executive has the financial tools including borrowing powers and necessary taxation levers to deliver sustainable public finances and public services for the people we serve.”