Maintaining pay parity for public sector workers in Northern Ireland with the rest of the UK will be "extremely challenging", the head of the 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.
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.
In the absence of devolved ministers in Belfast, Mr Heaton-Harris set a budget for Northern Ireland in a written ministerial statement at Westminster last week. Devolution is in abeyance as a result of a DUP boycott of the institutions in protest at post-Brexit trading arrangements.
Treasury Loan Cannot be Used to Fund Extra Pay for HCP
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.
"We are all very keen to ensure our healthcare workers are rewarded appropriately and there was a deal struck yesterday in England," Mr Brady said, before asking if the Treasury funds could help cover the extra pay costs. "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," adding that the funds for HCP would have to be found elsewhere.
Ms Brady said that all departments are working through the revised budget and 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," she said.
Need to Discuss NI Funding
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 Lockhart pointed out that 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."