Action Plan: Comprehensive Fiscal Reform for Northern Ireland

Unfortunately, under the current arrangements, local elections before May 2027. Time for strategic delivery.

Immediate Actions (Months 1-3)

1. Establish Fiscal Credibility

Freeze all new spending commitments

• Immediate moratorium on announcements of new programs, initiatives, or expansions
• No exceptions without identified offsetting savings
• Applies to all ministers equally

Implement emergency Budget correction

• Reduce 2026-27 departmental allocations by £113 million to reflect revaluation pause
• Distribute cuts proportionally based on non-earmarked allocations
• No further deferrals to monitoring rounds

Install real-time budget monitoring

• Monthly reporting of actual vs budgeted spend by department
• Public dashboard showing cumulative position
• Automatic triggers for corrective action at 2% variance

Establish independent Accounting Officer authority

• Accounting Officers empowered to refuse ministerial spending directions exceeding budget
• Protected from ministerial override except via formal Executive vote
• Quarterly attestation of departmental budget compliance required

2. Revenue Rationalization

Implement Reval 2026 with mitigation package

• Proceed with revaluation as scheduled (April 2026)
• Implement transitional relief caps matching England/Wales:
  • Properties up to £20,000 NAV: 5% cap year 1, 10% year 2, 25% year 3
  • Properties £20,001-£100,000: 15% cap year 1, 25% year 2, 40% year 3
  • Properties over £100,000: 30% cap year 1, 25% years 2-3
• Fund relief from efficiency savings, not new borrowing
• Expected cost: £40-50 million year 1, declining

Introduce hospitality sector-specific support

• 20% rates relief for hospitality properties (vs 40% in England/Wales – compromise position)
• Capped at £55,000 per business (half England/Wales level)
• Three-year sunset provision requiring renewal
• Cost: approximately £25-30 million annually

Domestic water charges – phased implementation

• Year 1 (2027-28): £200 per household
• Year 2 (2028-29): £400 per household
• Year 3 (2029-30): £600 per household
• Year 4 onwards: £800 per household (England parity)
• Revenue potential: £154m, £307m, £461m, £615m respectively
• Concurrent reduction in Regional Rate by equivalent amount (revenue neutral to households, improves transparency)

Regional Rate reform

• Shift to property value bands (like Council Tax in England) rather than pure proportional NAV
• Progressive structure: lower rates on lower-value properties
• Implement over 2027-29 period alongside water charges
• Eliminates “Rates = rent” ceiling that creates distortions

3. Structural Health Reform (Non-Negotiable)

Immediate efficiency program

• Target: Close 15% efficiency gap with England within 3 years
• Savings target: £300 million by year 3 (approximately £1.16 billion annually)
• Areas:
  • Administrative consolidation (6 Trusts to 1-2 by 2028)
  • Procurement (join England/Scotland frameworks)
  • Estate rationalization (reduce £1.4 billion estate by 20%)
  • Workforce productivity (match England staffing ratios)

Establish Health Transformation Fund

• £150 million over 3 years from borrowing headroom
• Available only for invest-to-save projects with independently verified business cases
• Gated releases tied to achievement of efficiency milestones
• Not available for recurrent spending

Introduce activity-based commissioning

• Move from block grants to payment-per-episode (like England NHS)
• Transparency on cost per procedure, waiting times, outcomes
• Phase in over 2 years starting with elective procedures
• Creates internal competitive pressure for efficiency

Mandatory regional service consolidation

• Single tertiary care provider (complex surgery, cancer, cardiac)
• Single emergency department network (close smaller A&Es, upgrade ambulance)
• Single imaging and diagnostics service
• Population of 1.9 million cannot sustain duplicate specialist services

Health Minister accountability framework

• Published efficiency targets with monthly progress reporting
• Independent verification of claimed savings
• Automatic allocation reduction if targets missed (50% of shortfall)
• No access to monitoring round additional funds without verified efficiency progress

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Strategic Reforms (Months 3-12)

4. Fiscal Framework with Teeth

Legislate binding fiscal rules

• Balanced budget requirement (no overspend permitted)
• Maximum 3% year-on-year real-terms departmental growth
• Borrowing restricted to capital investment only
• Reserve fund minimum 2% of Resource DEL (currently zero)

Multi-year departmental ceilings

• Firm 3-year allocations (not “draft” or “indicative”)
• Protected from in-year reallocation except by 80% Executive vote
• Allows genuine long-term planning and investment

Eliminate monitoring round system

• No in-year reallocations except genuine emergencies
• “Emergency” defined as unforeseen external shock, not budget mismanagement
• June/October/January monitoring rounds abolished
• Prevents gaming and undisciplined budgeting

Introduce forecast reconciliation requirement

• Departments must explain variance between forecast and outturn
• Persistent over-bidding or poor forecasting triggers budget penalties
• Creates incentive for honest budget requests

5. Expenditure Reform

Conduct zero-based spending review

• Every program justify existence from zero
• No “baseline plus” approach
• Completed within 12 months
• Target: Identify £500 million of low-value spending

Priority areas for reduction/elimination:

Super-parity policies review:

• Welfare mitigations: Reduce from £47.3m to £25m (maintain only severe hardship cases)
• Free prescriptions: Introduce £9.90 charge matching England (exemptions for vulnerable) – raises ~£45m
• Concessionary travel: Means-test or reduce off-peak discount – saves ~£15m
• Lower tuition fees: Increase to England levels phased over 3 years – saves ~£80m
• Total potential: £190 million annually

Agricultural support rationalization:

• Current: £332.5 million earmarked (highest earmarking at 57.8% of DAERA budget)
• Review all schemes for value-for-money
• Shift from unconditional payments to environmental outcomes
• Target: 15% efficiency saving = £50 million

Derating relief reform:

• Industrial derating costs £44.1 million annually
• Provides 100% relief to manufacturing – unsustainable
• Reduce to 50% relief (matching historical levels)
• Saves: £22 million

Eliminate low-value grants and schemes:

• Comprehensive review of all <£5m programs
• Estimated 200+ micro-schemes across departments
• High administrative overhead, low impact
• Target consolidation/elimination: £75 million

6. Programme for Government with Prioritization

Mandatory rank-ordering of priorities

• Not aspirational “everything is important” list
• Explicit trade-offs: “We will prioritize X over Y”
• Quantified outcomes attached to each priority
• Funding aligned to top 5 priorities only

Outcome-based budgeting

• Departments funded based on measurable outcomes, not inputs
• Public reporting of outcome achievement quarterly
• Budget consequences for persistent non-delivery

Service reduction/elimination schedule

• Explicit list of services that will be reduced or stopped
• Cannot have credible budget without stating what won’t be done
• Political agreement required before budget finalized

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Governance and Accountability Reforms (Months 6-18)

7. Political Accountability Framework

Individual ministerial responsibility for budgets

• Each minister legally accountable for departmental overspend
• Overspend above 1% triggers automatic investigation
• Findings published and minister required to appear before Assembly committee
• Persistent overspend results in loss of monitoring round access

Executive collective responsibility

• Ministers who vote for budget cannot subsequently claim insufficient funding
• Public voting record on all budget decisions
• Ministers who vote against must propose alternative allocations

Assembly scrutiny enhancement

• Finance Committee given 8-week scrutiny period before Executive vote
• Power to summon ministers and Accounting Officers
• Power to commission independent analysis
• Budget cannot proceed without Finance Committee report

8. Transform Budget Process

Three-year binding budgets (not annual)

• Set departmental envelopes for full 3-year period
• Annual budgets eliminated
• Only adjustment: technical changes for pay settlements, inflation
• Provides stability for transformation planning

Bottom-up capital prioritization

• Independent infrastructure commission rank all capital projects
• Scoring based on: economic return, strategic fit, deliverability, risk
• Executive can only fund projects in rank order (no cherry-picking)
• Prevents political preference overriding value-for-money

Publish comprehensive fiscal baseline

• All commitments, pressures, and assumptions transparently documented
• No hidden pressures or optimistic forecasts
• Independent validation by Fiscal Council before publication

9. Tackle Transformation Deficit

Establish Office of Public Sector Transformation

• Independent of departmental control
• CEO-level appointment with direct Executive authority
• Powers to mandate cross-departmental reforms
• £300 million transformation fund over 5 years

Priority transformation programs:

Shared services consolidation:

• Single HR, Finance, Procurement, IT service for entire NICS
• Currently fragmented across departments
• England/Scotland achieved 30-40% savings
• Target: £60 million annual savings by year 3

Digital transformation:

• Online-first service delivery (matching England Gov.UK standards)
• Eliminate paper-based processes
• Integrated data systems across departments
• Target: £40 million savings + improved service quality

Property rationalization:

• Reduce NI government estate from 1,200+ buildings
• Target 25% reduction through consolidation
• Modernize retained buildings (energy efficiency)
• Net savings after investment: £35 million annually

Procurement reform:

• Join England/Scotland procurement frameworks (economies of scale)
• Category management approach (centralized buying)
• SME access improvement (reduce reliance on expensive consultants)
• Target: £100 million annual savings

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Long-Term Structural Changes (Months 12-36)

10. Departmental Restructuring

Reduce number of departments from 9 to 6:

• Health & Social Care (unchanged – too large to merge)
• Education & Skills (merge Education + Economy skills functions)
• Economy & Infrastructure (merge Economy + Infrastructure)
• Communities & Justice (merge Communities + Justice)
• Environment & Agriculture (merge DAERA functions)
• Finance & Executive Office (merge DoF + TEO)

Rationale:

• Reduces ministerial overhead
• Eliminates coordination costs
• Forces integration of related functions
• Savings: £25 million annually in senior management

Reduce number of ALBs (Arm’s Length Bodies):

• Current: Over 100 NDPBs, executive agencies, other bodies
• Many have overlapping remits or unclear purpose
• Target: Reduce by 40% through merger/abolition
• Savings: £50 million annually

11. Pay and Workforce Reform

Introduce differential pay settlements:

• Not all departments get same % award
• Link to: productivity improvement, efficiency delivery, budget compliance
• Departments exceeding budget: 0% pay award following year
• Departments meeting efficiency targets: up to 4% award
• Ends automatic parity with England settlements

Workforce planning integration:

• Cannot hire without identified funding within envelope
• Vacancy management used as primary budget tool
• Natural attrition used to achieve workforce reductions
• Target: 5% headcount reduction over 3 years through non-replacement
• Savings: £150 million annually

Reform public sector pensions:

• Increase employee contributions to match England rates
• Phased over 3 years
• Savings to employers: £30 million annually

12. Education Rationalization

School estate consolidation:

• Current: 1,100+ schools for 330,000 pupils (small average size)
• England equivalent population would have ~750 schools
• Target: Reduce to 850 schools over 5 years
• Savings: £80 million annually + improved educational outcomes

End selective transfer (11-plus) system:

• Creates inefficient parallel grammar/non-grammar systems
• Duplicates infrastructure and reduces critical mass
• Comprehensive system more efficient
• Savings: £40 million + equity gains

Shared education acceleration:

• Current: Separate Catholic/Protestant/Integrated sectors
• Duplicate provision in many areas
• Mandatory sharing where pupil numbers don’t justify separate schools
• Savings: £60 million annually

Higher education funding reform:

• Increase tuition fees to England levels (£9,250)
• Currently £4,710 – subsidy costs ~£80m annually
• Student loans available (no upfront cost to students)
• Revenue raised: £80 million redeployed to schools/FE

13. Create Economic Growth Strategy

Infrastructure investment rebalancing:

• Current: Roads absorb disproportionate capital
• Shift to: rail, active travel, digital connectivity
• Economic return analysis required for all projects >£10m
• Independent Business Case Unit approval required
• Review historic/proposed schemes on merit basis and conduct TAG feasibility studies to determine true viability without pre-determined outcomes, namely external independent assessment

Rates relief reform for growth:

• Current small business relief cost: ~£100 million
• Poorly targeted (many recipients not actual small businesses)
• Reform to focus on: new businesses, growth businesses, innovation businesses
• Better outcomes at lower cost

Invest to save programs:

• Energy efficiency retrofit of public buildings
• LED streetlighting (80% energy saving)
• Solar on public buildings
• Upfront cost: £200 million, payback 7-8 years through reduced energy bills

14. Introduce Policy Costings Requirement

All new policies require 5-year costings:

• Independently verified by Department of Finance
• Must identify offsetting savings if net cost positive
• Published before Executive vote
• No exceptions

Manifesto costing requirement:

• All parties’ manifestos independently costed before elections
• Prevents unrealistic promises
• Fiscal Council publishes analysis
• Improves democratic accountability

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Political and Constitutional Reforms

15. Budget Agreement Process Reform

Remove ministerial veto on departmental allocations:

• Current system allows any minister to vote against budget
• Creates gridlock and encourages overpromising
• Reform: Budget passes with simple majority (not unanimity)
• Ministers bound by collective responsibility once agreed

Introduce “Budget Lock”:

• Once 3-year budget agreed, cannot be reopened except:
  • External shock requiring Emergency Budget (80% vote)
  • Technical adjustments (inflation, pay settlements)
• Prevents continuous renegotiation

Ban pre-emptive spending announcements:

• Ministers cannot announce new spending without Executive approval
• Breach results in allocation reduction
• Ends practice of forcing Executive’s hand through public commitments

16. Transparency and Public Engagement

Citizens’ Budget document:

• Plain English version showing:
  • Where money comes from
  • Where it goes
  • What services cost per household
  • Trade-offs being made
• Published before consultation

Performance dashboard:

• Real-time public reporting of:
  • Budget position
  • Service outcomes
  • Waiting lists
  • Efficiency progress
• Updated monthly, independently verified

Fiscal Council enhanced powers:

• Authority to cost all significant policy proposals
• Public commentary on budget credibility
• Annual report to Assembly (not Executive)
• Protected 5-year appointments

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Three-Year Implementation Roadmap

Year 1 (2026-27): Stabilization

Q1 (Apr-Jun 2026):

• Emergency budget correction (revaluation shortfall)
• Real-time monitoring installed
• Health efficiency program commenced
• Zero-based review launched

Q2 (Jul-Sep 2026):

• Fiscal framework legislation introduced
• Water charges legislation prepared
• Department restructuring consultation
• Transformation office established

Q3 (Oct-Dec 2026):

• First quarterly efficiency reporting
• Super-parity review completed
• Agricultural support reform announced
• Budget 2027-29 developed under new rules

Q4 (Jan-Mar 2027):

• Fiscal framework enacted
• 3-year Budget 2027-30 agreed
• Service reduction schedule published
• Year 1 savings verified: Target £200 million

Year 2 (2027-28): Transformation

Q1:

• Water charges introduced (£200/household)
• Reval transitional relief in place
• Shared services consolidation commenced
• School consolidation program started

Q2:

• Department merger completed
• Health Trust consolidation to 3 Trusts
• Property rationalization program commenced
• Digital transformation milestones

Q3:

• ALB reduction program 50% complete
• Procurement reform savings verified
• Workforce reduction through attrition on track
• Mid-term review

Q4:

• Year 2 cumulative savings: Target £450 million
• Programme for Government delivery review
• Budget 2028-31 agreed
• Transformation fund performance audit

Year 3 (2028-29): Sustainability

Q1:

• Water charges increase to £400/household
• Health efficiency gap 66% closed
• School estate consolidation complete
• New performance framework embedded

Q2:

• Comprehensive fiscal sustainability assessment
• Budget compliance confirmed 3 years running
• Health Trust consolidation to 1 Trust finalized
• Outcome-based budgeting fully operational

Q3:

• 3-year transformation review
• Reserve fund established (2% target achieved)
• Persistent efficiency culture verified
• Long-term fiscal sustainability certified

Q4:

• Year 3 total savings achieved: Target £800 million
• Budget 2029-32 agreed
• Wales/Scotland performance parity achieved
• Independent evaluation published

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Expected Outcomes After 3 Years

Fiscal Position:

• Balanced budgets achieved 3 consecutive years
• £800 million annual savings embedded
• Reserve fund of £300 million established
• Debt repayment schedule on track
• Regional rates competitive with England/Wales (after water charges offset)

Service Performance:

• Health waiting lists reduced by 40%
• Educational outcomes improved (school consolidation effect)
• Infrastructure investment increased 25% (efficiency dividend)
• Public satisfaction increased (transparency, accountability, delivery)

Governance:

• Budget agreed before fiscal year (3 years running)
• No ministerial dissent or overspending
• Programme for Government delivery confirmed
• Political accountability framework functional

Transformation:

• Digital-first service delivery achieved
• Efficiency gap with England closed
• Public sector workforce reduced 5% (through attrition)
• Productivity increased 15%

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Critical Success Factors

1. Political Will:

• Requires cross-party commitment to fiscal discipline
• Individual ministers must accept collective decisions
• Short-term pain for long-term sustainability

2. Protected Implementation Authority:

• Transformation office cannot be undermined by ministerial resistance
• Independent fiscal council must have real teeth
• Accounting Officers must have genuine authority

3. Public Communication:

• Honest about service reductions
• Clear on trade-offs being made
• Transparent about progress

4. Sequencing:

• Quick wins (efficiency) before painful cuts (services)
• Revenue increases (water) phased with rate reductions
• Transformation investment before workforce reduction

5. No Backsliding:

• Monitoring rounds permanently abolished
• Fiscal rules legally binding
• Independent verification mandatory

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Conclusion: The Fundamental Choice

Northern Ireland’s fiscal crisis stems from systemic political failure to make choices. The reforms above are comprehensive, evidence-based, and deliverable – but they require something currently absent: political willingness to disappoint some stakeholders in order to achieve fiscal sustainability.

The alternative to reform is continued managed decline: deteriorating services, persistent overspends, Westminster bailouts, and eventual imposed solutions that will be harsher than self-imposed reform.

Complete authority would allow implementation of these reforms. Current political structures prevent any of them.

That is Northern Ireland’s actual problem – not insufficient funding, but insufficient political will to use available funding effectively and make hard choices about priorities.