The Stormont executive isn’t obliged to pass UK Treasury funds to councils to enable them to meet increases in employers’ national insurance costs, the secretary of state has said.
If the money provided as a Barnett consequential isn’t given to councils it will put the burden for meeting the cost increase on already-cash strapped ratepayers.
Hilary Benn told The Irish News that it was at the discretion of the devolved administration how it spends its budget.
As Belfast City Council on Monday provisionally hiked the district rate by an inflation-busting 5.99%, the chair of its strategic policy and resources committee said the increase “reflects the rise in national insurance contributions brought in by the UK government”.
The council agreed that that the rate increase “could be re-examined”, up until February 15 – the date by which the rates must be legally set – “in the event of funds coming from the NI Executive to cover increases in national insurance contributions”.
Following the Treasury decision to grant councils in England £515m to meet the increase in employers’ national insurance costs, the Stormont executive will receive commensurate funding via the Barnett Formula.
It’s estimated that the devolved administration could get up to £17.5m to cover the added cost to councils in the forthcoming financial year.
Last month, in response to a written question from SDLP leader Claire Hanna, Labour minister Joe McMahon confirmed that Stormont would receive the equivalent funding to meet councils’ increased national insurance costs.
The Treasury has also confirmed to The Irish News that this is the case.
Belfast SDLP councillor Carl Whyte said that instead of agreeing the latest rates rise, which meant the district rate had increased cumulatively by more than 20% over the past three years, councillors should “lobby their colleagues in the executive to commit to pass on this funding.
“Instead of waiting for clarity from NI Executive ministers—who will receive this funding that they can pass onto councils—their party colleagues on Belfast City Council have hastily pushed through a rates increase in a panicked scramble, leaving Belfast ratepayers to foot the £3m national insurance bill.”
When asked about the issue during his visit to Belfast on Tuesday, the secretary of state declined to speculate on how much the Stormont executive would receive as a Barnett consequential.
Asked if the executive was obliged to pass the funding on to councils, Mr Benn said: “That is a matter for the executive. That is what devolved government is all about.”
He said the funding for increased national insurance costs was on top of what he termed a “record settlement for Northern Ireland”.
A statement from the Department of Finance said it had not yet received formal confirmation of funding but that it would likely “fall far short of what is required, by tens of millions of pounds”.
It said former finance minister Caoimhe Archibald and her successor John O’Dowd had made the British government “acutely aware of this significant shortfall”.
“Once funding is confirmed it would be a matter for the executive to decide how it is allocated,” the statement said.
