Matching public sector pay for Northern Ireland workers to UK 'challenging', MPs told

Maintaining pay parity for public sector workers in Northern Ireland with the rest of the UK will be "extremely challenging", the head of the Northern Ireland civil service has told MPs.

Jayne Brady told the Northern Ireland Affairs Committee that permanent secretaries were working through the implications of the budget set last week by Northern Ireland Secretary Chris Heaton-Harris.

She also said some decisions around implementing the budget in Northern Ireland can only be made by elected politicians.

Devolution is in abeyance as a result of a DUP boycott of the institutions in protest at post-Brexit trading arrangements.

In the absence of an executive, Secretary of State Chris Heaton-Harris set a budget for Northern Ireland last week.

The budget, which sees overall funding cut by 3.3% when accounting for inflation, means that cuts of £800 million will need to be made to public spending, according to the Northern Ireland Fiscal Council.

The Department of Health is set to receive a 0.5% pay increase, however increased costs mean that it will struggle to match current levels of service.

On Tuesday, it was announced that more than one million NHS staff in England are to receive a 5% pay rise, after health unions backed the deal.

However, Neil Gibson, the permanent secretary at the Department of Finance, told the committee that it was his understanding that any Barnett consequentials arising for Northern Ireland would have to go to pay off a £297 million Stormont overspend.

The Northern Ireland secretary said a Treasury £297 million advance payment to help plug a financial blackhole in Stormont's finances could be repaid using any future in-year funds allocated to the region by the Government through the Barnett system.

Raising the issue at the committee, DUP MP Carla Lockhart asked what the implications of this were for health workers in Northern Ireland.

She said: "In relation to the repayment of the overspend, the Secretary of State has brought forward that it will be taken from the Barnett consequentials in the year.

"We are all very keen to ensure our healthcare workers are rewarded appropriately and there was a deal struck yesterday in England.

"The Barnett consequential will come from that to Northern Ireland. Will that Barnett consequential have to be used for paying back our overspend and will we then have to find that money for our healthcare workers from within our budgets?"

Mr Gibson said: "It is our understanding at the moment that there wouldn't be exceptions.

"Any form of Barnett consequential would be used to repay that overpayment, so we would have to find that elsewhere."

Ms Brady added: "We have got the revised budget from last Thursday, the permanent secretaries of all departments are working through the implications of the £297 million amelioration.

"But keeping parity with public sector pay overall with the UK will be extremely challenging with the budget settlements that are provided."

Thousands of public sector workers in Northern Ireland, including those in health and education, have taken industrial action in recent months as part of ongoing disputes over pay.

Alliance Party MP Stephen Farry said: "One of the short-term dangers is around what is happening with public sector pay settlements and the ability of Northern Ireland to deliver on those if there is a first call on Barnett consequentials elsewhere to balance our books."

Mr Gibson said: "The public pay pressures are very real. We saw that with the industrial action across different parts of public service."

He added: "It is one of the most significant pressures weighing upon us. It is right up at the top of all permanent secretaries' radar."

Ms Brady said that the civil service would encounter "difficulty" in implementing the budget under current arrangements.

"There is difficulty, of course, within the budget which was outlined, and the Secretary of State I know presented this committee last week, and that budget outline," she said.

"But also there is difficulty in the governance arrangements which are needed to deliver within that framework and to give effect to those statements."

Ms Brady stated that, as unelected officials, there would be decisions relating to the budget that the civil service would not be able to make.

"These decisions, of course, should always be made by those who are democratically elected and have the electoral mandate to make those decisions, so there will be decisions that we cannot make."

Chairman of the committee, Conservative MP Simon Hoare, asked Ms Brady if there was a risk of the stasis continuing in Northern Ireland at a time when "quick order change" was needed.

Ms Brady stated that officials were not in a position to make political decisions.

"Officials should have no role in political decisions.

"Absolutely, in your role, we are there to support the political process, but not to be involved in it and our input and analysis should be to advise and should be impartial and balanced in that provision," she said.

She added: "The decisions that have been made, we have provided analysis on data and input as to the budget implications and the cost and provided analysis to the NIO, the Secretary of State has made the decision in terms of the budget.

"But I have to be clear that it is within those areas, there are decisions that cannot be made by civil servants for the very reasons that you set out."

Ms Lockhart said there needed to be a serious conversation about how Northern Ireland is funded.

She said: "There is an issue around Stormont and the restoration of Stormont, but the reality is if Stormont was back in the morning there is no change in terms of the funding envelope, there is no change in relation to how Northern Ireland is funded to make the transformation that is needed.

"Would you agree there needs to be a serious conversation around the Barnett formula and how it is applied to Northern Ireland?"

Mr Gibson said: "Yes, a conversation is required. As the fiscal council evidence suggests, we are rapidly if not already at the point at which the funding per head is not at the level of measured need.

"There is a debate to be had about that measurement of need."

The committee also discussed the need for a long term transformational plan for Northern Ireland economy.

Ms Brady said a long-term plan for Northern Ireland's spending would require stable political institutions.

"I would argue that we are at an inflection point where we need to reset what has worked well and where the enduring issues still are," she said.

"And that for me initially, and this would be my advice to an incoming executive, the stabilisation plan plus looking at the transformation and in that there will be degrees of hard decisions which need to be made, in the whole, in its entirety in terms of the looking towards what the fiscal floor may mean for Northern Ireland but also how we fund those services and how we commit to delivering on those transformations.

"And they will require stable institutions, they will require long-term decision making and long term budgeting as well."

Mr Gibson further said a systemic change was required to public spending in Northern Ireland and that the NICS is aiming to have a transformation plan ready upon the return of the executive.

"The sort of transformation we're talking about will require a series of decisions over a quite protracted period," he said.

"It's not as if there are 2,3,4 levers that just simply need pulled and there's nowhere to pull them, it's a more systemic change that's required."

"I want to give all members assurance of the work that we're doing with all the parties to talk about what that transformation journey looks like, and I know that's an easier word to say than to implement but how would you govern a proper transformation programme?

"What choices would you take?

"Any basic analysis of the data will show the trajectory of health spend, education spend is not in keeping with the trajectory of tax incomes, and that's not Northern Ireland problem, but we have to start somewhere and our job as public servants is to make sure all of that material for how a transformation programme would work, be governed, deliver, be monitored, is our job.

"And so when we talked, we've picked up on some elements this morning of things like fiscal floors, but there's a whole gamut of things, digital transformation, service delivery, transformation, proper research to transform what we do, and we're working very diligently with the parties to have that transformation plan ready for returning executive."

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