Water charges and higher rates raised as possible solutions to balancing Northern Ireland's public books

The measures are mentioned in a trio of reports published on Tuesday by the NI Fiscal Council in the wake of last week’s Tory-authored budget for Northern Ireland, which was introduced by Chris Heaton-Harris in the absence of a devolved government.

Although his budget kept NI’s 2023/24 spending more or less at 2022/23 levels, it was still widely seen as heralding deep cuts to public services due to inflation and increasing demand on those services.

In the wake of the Fiscal Council’s reports today, the DUP repeated its call for more money from the Treasury in London to help shore up the Province’s public sector.

Here are just some of the options the Fiscal Council laid out as next steps:

• The introduction of explicit domestic water charges;

• An increase in regional rates;

• Public sector “pay restraint";

• Cutting “lower priority”spend;

• Seeking more money from the Treasury;

• Or “simply to accept that the quantity and quantity of services will be lower than elsewhere in the UK”.

On the issue of “pay restraint”, the NI Fiscal Council suggested hiking the pay of workers like teachers at a lower level than in GB could “ease the pressure” on NI’s overall budget.

This “would be highly unpopular and would stir major political controversy,” the council said.

"But at the same time certain trade-offs are perhaps inevitable.

"NI can opt to try to maintain as much pay parity with GB as possible but the consequence of that is, increasingly, likely to be some reduction in range of and/or quality of public services.”

The NI Fiscal Council’s four members are Prof Sir Robert Chote (chairman of the UK Statistics Authority and former IMF advisor), Maureen O’Reilly (private economics advisor), Prof Alan Barrett (a former Irish government fiscal advisor), and Dr Esmond Birnie (a former UUP MLA and a senior economist at Ulster University).

It was set up in 2021 with the task of advising the government on spending matters.

The three reports it published separately on Tuesday were nevertheless all broadly on the same theme: keeping NI’s public finances on an even keel in the long term, in the wake of last week’s budget.

In response to these reports, East Belfast DUP MP Gavin Robinson said that the current “squeeze” on the amount of public funding provided from London “will impact any future Executive and is entirely outside the control of local ministers”.

He said: “I have warned for some time that the Barnett Formula [the way London funding for NI is calculated] is not working for Northern Ireland.

"The Fiscal Council has again highlighted that the Treasury contribution to public services in Northern Ireland is going down rather than increasing, whilst need is increasing.

”Previous assessments calculated that funding in Northern Ireland needed to be 21% higher than equivalent spending in England, whereas that figure is now estimated to be around 24%.”

Whilst he acknowledges the need for “necessary reform” to make the NI public sector, he added “sustainable local decision-making will require sustainable funding from Treasury”.

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