Stormont pay parity policy undermining public services, research suggests

Increases to the NI budget are determined by a calculation known as the Barnett formula.

Whenever spending is increased on a service in England, Stormont gets an equivalent spending increase, adjusted for the extent to which each service is devolved. This money is known as “Barnett consequentials”.

Stormont has a relatively larger public sector than England.

So when the UK government increases spending to finance a pay deal there, the amount of money coming to NI does not increase sufficiently to finance the same percentage uplift.

That is exacerbated by the fact that some services delivered by the public sector in NI are privatised in England.

The Fiscal Council said this issue was significant: “There are large cohorts of staff in NI whose pay awards are not directly (or only partially) supported by Barnett consequentials, including in areas such as social care, water, transport and housing.”

Launching the paper, Sir Robert Chote, chair of the Fiscal Council, said: “We are not taking a view on whether pay parity with England is desirable.

“Our role is to examine the implications of policy choices and to assess what they mean for the sustainability of the executive’s finances.

“When funding generated by pay awards in England is insufficient to cover the cost of matching those awards in NI, the executive faces difficult choices.

“We view this report as the start of a conversation rather than its conclusion.”