Executive kicks back on demand to raise £113m as part of £3.3bn funding package for Stormont

But the finance minister said the governing parties need more time to develop a plan for sustainable finances.

The funding condition was outlined as the government confirmed details of the support settlement in a letter to finance minister Caoimhe Archibald.

The government described it as a “significant, fair and generous” package, but the DUP said the government’s focus should be on public services ahead of revenue raising.

They added that they will press for a “fair and sustainable” deal.

Revenue-raising methods could include increasing the regional rates bill – or introducing water charges. Options also include cuts to universal concessions such as free prescriptions or public transport passes for people aged 60 and above.

Immediate revenue raising has been dismissed by Ms Archibald.

In a letter to the Chief Secretary to the Treasury Laura Trott, the finance minister said: “The requirement that we raise £113m through locally generated revenue in the next 12 months is not consistent with a strategic Sustainability Plan.

“To expect this funding to be generated in such a short space of time can only serve to cause more harm to hard-pressed families, households and businesses.

“Our message to Westminster is simple. The executive should be given time and space to develop and agree a properly thought through Sustainability Plan that will put our finances on a more stabilised footing. It is critical we have the right resources to deliver effective public services for all our citizens.

“We ask that the British government act in good faith. There can be no further damage to our public services.”

The letters were sent yesterday amid an ongoing dispute over what Stormont can do itself to help balance the books – and when it should do it.

The DUP’s Gavin Robinson said: “Families across NI are struggling with rising costs, and whilst the government are focused on revenue raising, their first duty is to ensure there are properly funded public services. The public cannot be asked to pay more for poorer services.

“It was several years ago when Phillip Hammond was chancellor of the Exchequer that the DUP first highlighted the fact that Northern Ireland is underfunded. Other parties have now moved onto that same page and it has been reinforced by the Northern Ireland Fiscal Council.

“The government have finally accepted that Northern Ireland falls below their own definition of objective need in terms of funding. Whilst our decisions in relation to the restoration of devolution were solely focused on restoring Northern Ireland’s place within the UK and its internal market, we will continue to press for our funding to be on a fair and sustainable basis.”

The government has offered reform of the Barnett formula for allocating Treasury funds to Northern Ireland, with funding rates for the province set at 24% above comparative rates in England. The government said this would reflect the “different levels of need in Northern Ireland”.

All of the governing Stormont parties are agreed that the rate should be increased, but there are differing views on exactly how much. The offer includes flexibility to allow deferment of repayment of a multimillion-pound overspend while Stormont ministers were not in place in recent years.

But Ms Archibald said that “making the write off of the £559 million for debt repayment conditional on the publication and implementation of a sustainability plan is not acceptable”.

She said it is the strong view of the executive that “these debts exist primarily due to the underfunding of public services”.

The government said it has also committed to open discussions with the executive on a “new fiscal framework” for Northern Ireland.

NI Secretary Chris Heaton-Harris said: “This package tackles the immediate budget pressures facing the restored executive and allows it to take action to rapidly stabilise public services, while increasing opportunities for investment and improved infrastructure.”