NI Executive Cycle of fiscal dysfunction – The Ultimate Explanation: Political Cowardice Dressed as Confidence

30 Jan 2026

BY Kevin Barry BSc(Hons) MRICS
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NI Executive Cycle of fiscal dysfunction – The Ultimate Explanation: Political Cowardice Dressed as Confidence

Why did Minister O’Dowd proceed with Reval 2026 figures despite knowing the process was flawed, and then claim “full confidence” after pausing it?

Because he is attempting to:

Appear fiscally responsible (published balanced budget)
Appear politically responsive (paused controversial revaluation)
Avoid accountability (maintains figures are sound, just not using them)
Defer consequences (keeps revenue in budget despite pausing collection)
Protect officials (full confidence prevents scapegoating)
Maintain flexibility (can restart revaluation later)
Shift blame (waiting for England, implying methodology is UK-wide problem)

This requires:

Using figures he knows are problematic
Pausing collection of revenue he’s budgeted for
Claiming confidence in work he’s refusing to implement
Maintaining spending plans based on income he won’t receive

It is simultaneously:

Clever political management (short-term)
Fiscal irresponsibility (long-term)
Historically familiar (Northern Ireland pattern)

The “full confidence” statement is the keystone that holds this contradictory position together:

Without it, he’d have to either:

Admit the figures are wrong → revise budget → cut spending, OR
Defend the figures as right → proceed with revaluation → face political heat

The “full confidence” statement allows him to do neither while claiming to do both.

This is not leadership. This is survival.

And it’s why Northern Ireland remains trapped in a cycle of fiscal dysfunction that even conditional debt write-offs and UK Government oversight cannot break.

The Minister has full confidence in figures he won’t use, to fund a budget he can’t deliver, to meet commitments he won’t honor, while claiming he’s listening to concerns he won’t address.

That’s not governance. That’s political theatre at the expense of fiscal reality.

The details

Impact of Revaluation 2026 Pause on Draft Budget 2026-29/30

Background

Finance Minister John O’Dowd announced on 29 January 2026 that he is halting the controversial Revaluation 2026 (Reval 2026) process following significant backlash from the business community, particularly the hospitality sector. This decision was made within days of Land & Property Services (LPS) publishing draft revaluations for 75,000 non-domestic properties, which showed dramatic increases for many businesses, with some hospitality premises facing increases exceeding 135%.

Budget Revenue Assumptions

The Draft Budget 2026-29/30 assumes the following non-domestic regional rate increases across the budget period:

2026-27: 3% increase in Non-Domestic Regional Rate poundage
2027-28: 3% increase in Non-Domestic Regional Rate poundage
2028-29: 3% increase in Non-Domestic Regional Rate poundage

These increases were specifically set at 3% (lower than the 5% domestic rate increase) to reflect business sector concerns about employer National Insurance Contribution increases announced in the Chancellor’s Autumn Budget.

Revenue Impact Analysis

The budget documents indicate that Regional Rates contribute approximately 4% of the Executive’s total funding envelope across the budget period. While the draft budget factsheet shows Regional Rates as a funding source across all three years (2026-29), the specific monetary values are presented visually in charts rather than in detailed tables.

According to the 2024-25 budget assessment document, Regional Rates provided £698 million in 2024-25.

Critical Issues Created by Revaluation Pause

1. Revenue Calculation Complexity

The pausing of Reval 2026 creates significant uncertainty because:

The budget assumes 3% increases in non-domestic poundage rates across three years
However, these poundage increases were expected to be applied to the new, higher valuations from Reval 2026
With revaluation paused, the same 3% poundage increases will now apply to the existing, lower 2023 valuations
This fundamentally changes the revenue yield calculation

2. Hidden Revenue Shortfall

The budget documents do not explicitly quantify:

How much additional revenue was expected from the combination of revaluation increases plus the 3% poundage increases
What the revenue difference will be between applying 3% poundage to old valuations versus new valuations
Whether the £113 million local funding commitment to Treasury (referenced in both 2025-26 and 2026-29/30 budgets) can still be met

3. Timing and Scale of Budget Adjustment

The Minister’s statement on 29 January 2026 indicates he will “now consider the next steps” and remains in “listening mode”. This creates several problems:

The budget is already published and in consultation
Departments are planning based on funding envelopes that may be overstated
The final budget must be agreed before the start of the 2026-27 financial year (1 April 2026)
There is very limited time to recalculate revenue projections and adjust departmental allocations

4. Absence of Contingency Planning

Notably, the draft budget documents contain no reference to the revaluation process, its timing, or any sensitivity analysis of revenue assumptions. This represents a significant gap in budget documentation, as the revaluation was scheduled to take effect in April 2026 – the same month the budget begins.

Conclusion

The effect of pausing Revaluation 2026 on the draft three-year budget is substantial but currently unquantified in the published documents. The budget assumes non-domestic rate revenue based on applying 3% annual poundage increases, but the underlying valuation base has now fundamentally changed.

The Minister will need to either:

Identify alternative revenue sources to replace the shortfall, or
Reduce departmental allocations in the final budget, or
Reduce the planned 3% non-domestic poundage increases (which contradicts the stated £113 million revenue-raising commitment)

Given that the Executive is already operating in an extremely constrained fiscal environment with no headroom, and that the Minister’s WMS explicitly states that “any increase in one area will inevitably mean a reduction in another”, this revenue shortfall will necessitate spending cuts unless alternative revenue sources can be identified before the final budget is agreed.

The absence of this analysis in the draft budget documentation represents a material omission that significantly undermines the reliability of the published spending plans.

The shortfall

Estimated Revenue Shortfall from Revaluation 2026 Pause

Key Data Points from Available Evidence

1. Overall NAV Increase from Reval 2026:

Total non-domestic property values increased by approximately 15% overall according to LPS (source: Department of Finance, 23 January 2026)

2. Current Non-Domestic Rates Revenue:

Approximately £720 million per annum (source: Department of Finance announcement, January 2026)
2024-25 Regional Rates: £698 million (source: NI Executive 2024-25 Budget assessment)

3. Planned Poundage Increases in Draft Budget 2026-29/30:

3% per annum for non-domestic regional rate across all three years (2026-27, 2027-28, 2028-29)

4. Sector-Specific NAV Increases:

Industrial/warehousing: +16%
Overall average: +15%
Retail: +9%
Offices: +9%
Hospitality (hotels): +63% to +87% average
Some hospitality properties: +100% to +342%

Revenue Calculation Methodology

The critical issue is that the budget assumes 3% poundage increases will be applied to the new, higher valuations from Reval 2026. With the revaluation paused, these poundage increases will now apply to the existing 2023 valuations.

Baseline Scenario (With Reval 2026):

2025-26 base (estimated): ~£730 million
NAV increase from revaluation: +15%
New valuation base: £730m × 1.15 = £839.5 million
2026-27 with 3% poundage increase: £839.5m × 1.03 = £864.7 million
2027-28 with further 3% increase: £864.7m × 1.03 = £890.6 million
2028-29 with further 3% increase: £890.6m × 1.03 = £917.3 million

Actual Scenario (Without Reval 2026):

2025-26 base (estimated): ~£730 million
No NAV increase (revaluation paused)
2026-27 with 3% poundage increase: £730m × 1.03 = £751.9 million
2027-28 with further 3% increase: £751.9m × 1.03 = £774.5 million
2028-29 with further 3% increase: £774.5m × 1.03 = £797.7 million

Estimated Revenue Shortfall

Financial Year	With Reval 2026	Without Reval 2026	Shortfall
2026-27	£864.7m	£751.9m	£112.8m
2027-28	£890.6m	£774.5m	£116.1m
2028-29	£917.3m	£797.7m	£119.6m
Total 3-Year Shortfall			£348.5m

Critical Observations

1. First-Year Shortfall Matches Revenue Target

The estimated first-year shortfall of £112.8 million is virtually identical to the £113 million local revenue-raising commitment made to Treasury in the financial package. This is not coincidental – the budget appears to have been constructed on the assumption that the combination of:

5% domestic rate increase, plus
3% non-domestic rate increase, plus
15% uplift in non-domestic NAV from revaluation

would deliver the required £113 million. With revaluation paused, approximately half of this revenue disappears.

2. Cumulative Impact Across Budget Period

The three-year cumulative shortfall of £348.5 million represents:

Approximately 1.7% of the total £19.9 billion budget for 2026-27
Approximately 26% of the total planned Regional Rates revenue over the three-year period
More than the entire annual budget of several smaller departments

3. Conservative Estimate

This estimate is conservative because:

It assumes a uniform 15% NAV increase, but certain high-revenue sectors (hospitality, industrial) showed much higher increases
It does not account for potential growth in the non-domestic property base
It assumes the current £730m baseline, which may already be understated

4. No Alternative Revenue Source Identified

The draft budget documents contain no contingency for this scenario. The Minister’s WMS explicitly states that “any increase in one area will inevitably mean a reduction in another.”

Implications for Budget Credibility

The pausing of Reval 2026 creates a revenue hole of approximately £113 million in 2026-27 alone, growing to £120 million by 2028-29. Given that:

The Executive is already operating with no fiscal headroom
The budget already relies on continued overspends being eliminated
Any 2025-26 overspend will reduce 2026-27 funding further
The Minister has committed to not reducing services

The published spending plans in the Draft Budget 2026-29/30 are materially overstated by approximately £350 million over the three-year period, with no identified mechanism to close this gap.

This represents a fundamental flaw in the budget’s revenue assumptions that will necessitate either significant spending cuts or identification of alternative revenue sources before the final budget can be agreed.

Comparison with GB

Comparison: Hospitality Rates Valuation – Northern Ireland vs Great Britain

Valuation Methodology: IDENTICAL

Both NI and GB use the same fundamental approach:

The “Fair Maintainable Trade” (FMT) or “Fair Maintainable Turnover” methodology is used across all UK jurisdictions – England, Wales, Scotland, and Northern Ireland.

According to LPS deputy secretary Sharon Gallagher (speaking to Stormont’s Finance Committee, 28 January 2026): “This is the tried and tested methodology that’s used across England, Scotland and Wales. There is no alternative in place at this point in time.”

How FMT works (identical across UK):

Valuers estimate the annual level of trade (excluding VAT) that a hospitality property could reasonably achieve if operated efficiently
Based on drinks sales, food sales, accommodation, and other receipts
A percentage is applied to each revenue stream to derive the Net Annual Value (NAV)
The percentage varies by location, trade level, and type of establishment
The valuation assesses the property’s potential, not the actual business performance

Critical Differences: Relief and Transitional Support

Despite using identical valuation methodology, England and Wales provide substantial mitigation measures that Northern Ireland does not:

England & Wales (2025-26):

1. Retail, Hospitality & Leisure Relief:

40% relief on rates bills for eligible properties
Cash cap of £110,000 per business across all properties
Applies to occupied retail, hospitality, and leisure properties
Worth over £1.5 billion in 2025-26 alone

2. Transitional Relief (from April 2026): Caps on annual bill increases following revaluation:

Properties up to £20,000 RV: 5% cap in 2026-27, 10% in 2027-28, 25% in 2028-29
Properties £20,001-£100,000 RV: 15% cap in 2026-27, 25% in 2027-28, 40% in 2028-29
Properties over £100,000 RV: 30% cap in 2026-27, 25% in 2027-28 and 2028-29

3. Permanently Lower Multipliers (from April 2026):

New lower multipliers specifically for retail, hospitality, and leisure properties
Small business RHL multiplier: 38.2p
Standard RHL multiplier: 43.0p
(Compared to standard multiplier of 49.9p for non-RHL properties)

4. Supporting Small Business Scheme:

Extended to include businesses losing RHL relief in 2026-27
Caps increases at higher of £800 or relevant transitional relief percentage

5. Draft Valuations Published Earlier:

England/Wales: Published November 2025 (5 months before implementation)
Northern Ireland: Published January 2026 (3 months before implementation)

This gave English and Welsh businesses significantly more time to plan and challenge valuations.

Northern Ireland (2025-26 and 2026-29):

1. NO Retail, Hospitality & Leisure Relief

Zero equivalent to the 40% relief available in England/Wales
No sector-specific support despite identical valuation pressures

2. NO Transitional Relief Scheme

No caps on bill increases following revaluation
Businesses facing 100%+ increases have no phased transition
Hospitality Ulster reports some businesses facing increases of 135% to 342% with no mitigation

3. NO Lower Multipliers for Hospitality

All non-domestic properties pay the same regional rate poundage
No recognition of hospitality sector challenges in rate structure

4. NO Supporting Small Business Extension

Limited small business rate relief exists but not extended for revaluation impact

5. COVID Relief Withdrawal:

Like England/Wales, COVID support has ended
However, no transitional support to cushion the impact
NI Hotels Federation reports this alone increased NAVs by approximately 30%

Impact Comparison

England/Wales Example (from UK Government factsheet):

A pub with RV increasing from £50,000 to £110,000:

2025-26 bill (with 40% relief): £14,970
2026-27 bill (with lower multiplier + transitional relief cap): £19,461
Increase capped at 30% = £4,491

Northern Ireland Equivalent:

Same pub with RV increasing from £50,000 to £110,000:

2025-26 bill (no relief): ~£28,500 (using estimated combined poundage of ~0.57)
2026-27 bill (no relief, with 3% poundage increase): ~£64,570 (using RV £110,000 × 0.587)
Increase = 127% with NO mitigation

(Note: NI poundage rates are illustrative as exact figures not provided in budget documents)

Why the Disparity Matters

The NI Hotels Federation highlighted (27 January 2026) that:

Hotel NAVs have increased by approximately 87% on average
This is 2.5 times higher than inflation (35.5%) since 2015
The sector faces approximately £400,000 per week in additional rates from 2026-27
Combined with 20% VAT (vs 13% accommodation / 9% food & beverage in Republic of Ireland), NI hospitality faces severe competitive disadvantage

Why England/Wales Provide Relief but NI Does Not

1. Fiscal Capacity:

England/Wales: UK Government can fund relief schemes through general taxation
Northern Ireland: Must fund any relief from constrained block grant allocation
The £1.5 billion England/Wales hospitality relief would cost Northern Ireland approximately £50-60 million based on relative population/property numbers

2. Political Decisions:

UK Government explicitly recognized hospitality sector pressures in Autumn Budget 2024
NI Executive chose not to replicate these reliefs despite using identical valuation methodology
Priority given to meeting £113 million revenue-raising target to Treasury

3. Budget Constraints:

NI Executive operating with no fiscal headroom
Any relief provided to hospitality would require cuts elsewhere
Minister’s statement: “any increase in one area will inevitably mean a reduction in another”

Conclusion

The valuation methodology for hospitality properties is identical across Northern Ireland and Great Britain. However, the policy response to revaluation impacts is fundamentally different:

England/Wales: Comprehensive package of reliefs, transitional caps, and permanently lower multipliers totaling over £1.5 billion
Northern Ireland: Zero sector-specific relief, no transitional protections, no mitigation measures

This means NI hospitality businesses face the same underlying valuation methodology as their GB counterparts but with none of the support mechanisms to cushion revaluation impacts. The result is that identical turnover growth (often driven purely by inflation rather than real profitability increases) translates into full rates bill increases in NI, while being substantially mitigated in England and Wales.

The pause of Reval 2026 in Northern Ireland on 29 January 2026 suggests political recognition that applying the methodology without mitigation was creating unsustainable outcomes for the sector, but this decision came only after the valuations were published and weeks into the budget consultation period, highlighting the absence of strategic planning around revaluation impacts in budget construction.

Executive ministers and their problems

Securing Executive Agreement on Final Three-Year Budget 2026-29/30

Current Status

The Draft Budget 2026-29/30 has been published for consultation (closing date not yet specified in available documents). The Finance Minister’s WMS states: “The purpose of this Statement is to inform the Assembly of my proposals for the draft Budget for 2026–29/30, which I intend to publish for public consultation while working in parallel with Executive colleagues to reach agreement on a final Budget.”

This is not yet an agreed Executive budget – it represents the Finance Minister’s proposals requiring formal Executive approval.

Legal Requirements for Executive Agreement

According to the Northern Ireland Act 1998 and budget process documentation:

Final Budget requires assent of the majority of Ministers in the Executive
Agreement is achieved through Executive Committee voting
The Finance Minister presents revised proposals incorporating consultation responses
Budget Bill then proceeds to Assembly via normal legislative process

Historical Precedent: Budget Agreement Challenges

2024-25 Budget Experience:

The most recent budget process (documented in the 2024-25 assessment) reveals significant challenges:

1. Health Minister Dissent:

Robin Swann (UUP Health Minister) was the one member of the Executive not to vote in favour of the overall Budget settlement
Health receives approximately 51% of total departmental allocations (£7.76 billion of £15.17 billion in 2024-25)
Health Minister expressed concerns that “departments used different criteria to define inescapable pressures”

2. Unmet Bids:

Departmental bids totaled over £3 billion in 2024-25
Only £958 million available to allocate
Bids exceeded available funding by 3.1 times (unprecedented ratio compared to 1.6-1.8 times in previous years)

3. All Ministers Started Unfunded:

“No Minister is starting the year in a fully funded position having their bids met”
“Decisions will be needed in every department to ensure public services are delivered within the Executive budget allocations”

Current Draft Budget 2026-29/30: Known Issues

1. Revaluation Revenue Shortfall (approximately £350 million over 3 years)

The pause of Reval 2026 announced 29 January 2026 creates an immediate £113 million shortfall in 2026-27, with the Finance Minister yet to identify:

Alternative revenue sources, or
Which departmental allocations will be reduced, or
How the £113 million Treasury revenue commitment will be met

This was not addressed in the draft budget despite being announced during the consultation period.

2. 2025-26 Overspend Impact

From the Minister’s WMS: “Any overspend in the current financial year will reduce the funding available in this budget period; however, the exact amount will not be known until the year end.“

The Minister notes: “Some Ministers have acted responsibly in this regard” – implying others have not.

This creates uncertainty about actual opening allocations for 2026-27.

3. Ministerial Dissent Already Signaled

The Minister’s WMS explicitly states: “In responding to the draft Budget, I ask all Assembly Members that if they believe additional funding should be allocated to a particular area, they also propose clear alternatives identifying where that funding should be reallocated from. It is important that solutions and ideas are put forward. I have made the same request to my Ministerial colleagues.”

This language suggests ministers are already expressing dissatisfaction with allocations.

Key Pressure Points for Agreement

1. Health (Largest Department – ~43% of Resource DEL)

Historical pattern: Health consistently bids significantly above allocation and resists cuts

2024-25 precedent:

Bid: £1.293 billion additional (17.8% above baseline)
Received: £7.76 billion (51.2% of available budget)
Health Minister voted against final budget

Current challenge: Health allocation must absorb:

Pay pressures (3% assumed, but actual awards typically higher)
Demand growth from aging population
Transformation costs without additional transformation funding
Efficiency gap with England remains unaddressed

2. Education (Second Largest – ~19% of Resource DEL)

2024-25 precedent:

Bid: £910 million additional (35.3% above baseline)
Bid exceeded available funds significantly
Infrastructure pressures particularly acute

Current draft budget: Education and Infrastructure departments given “first call on the basis of an equal share, on any funding that becomes available up to a maximum of £20 million” – this preferential treatment may cause resentment from other ministers.

3. Justice

2024-25 precedent:

Bid: £446 million additional (39.6% above baseline)
Highest bid as percentage of baseline

Current challenge: PSNI data breach costs excluded from draft budget baseline, creating uncertainty about actual funding needs.

4. Infrastructure

Acute pressures explicitly recognized in draft budget through preferential access to any additional funding (shared with Education).

Strategic Considerations for Securing Agreement

Option 1: Reduce Allocations Across Board

Required to address revaluation shortfall:

2026-27: ~£113 million reduction needed
2027-28: ~£116 million reduction needed
2028-29: ~£120 million reduction needed

Distribution challenge:

Pro-rata cuts would hit Health hardest (£48m in 2026-27)
Health Minister historically unwilling to accept cuts
All ministers already stated their allocations insufficient

Political viability: Very Low – repeats 2024-25 scenario where Health Minister voted against budget

Option 2: Reduce Non-Domestic Rate Poundage Increase

Approach: Lower planned 3% increase to 0-1% to match reduced revenue from old valuations

Impact:

Would acknowledge economic reality following revaluation pause
Reduces revenue shortfall but doesn’t eliminate it
Politically defensible given business community pressure
Still requires some spending cuts (~£50-80 million)

Political viability: Medium – reduces problem but doesn’t solve it

Option 3: Increase Domestic Regional Rate Further

Approach: Increase domestic rate from 5% to 7-8% to compensate for non-domestic shortfall

Impact:

Shifts burden from business to households
Each 1% increase yields approximately £7-8 million
Would need 14-15% total domestic increase (vs 5% planned)
Politically toxic given cost-of-living pressures

Political viability: Very Low – likely unacceptable to multiple parties

Option 4: Defer Problem to In-Year Monitoring

Approach: Agree draft budget “as is” with understanding that shortfall addressed through June 2026-27 monitoring round

Risks:

Departments plan based on inflated allocations
Mid-year cuts more disruptive than pre-year planning
Accountability less clear
Repeats pattern of undisciplined budget management

Political viability: Medium-High – allows agreement now, delays pain

NI Fiscal Council assessment: This approach contributed to historical overspends

Option 5: Seek Additional Treasury Funding

Approach: Request exceptional funding to cover revaluation shortfall

Feasibility:

Minister states: “I will also be urging the Treasury to phase any reduction across the entire budget period”
This refers to 2025-26 overspend, not revaluation issue
Treasury unlikely to provide additional funding for policy choice (pausing revaluation)
Executive has already received financial package commitments

Political viability: Low – Treasury signaled no additional funding beyond Autumn Budget consequentials

Process Timeline and Critical Milestones

Immediate Actions Required (January-February 2026):

Recalculate revenue projections with paused revaluation
Quantify 2025-26 final overspend (year-end accounts)
Revised departmental allocations reflecting both issues
Bilateral discussions with each minister before Executive meeting

Formal Process Steps:

Consultation closure (date TBC)
Equality Impact Assessment review and revision
Departmental consultations must complete
Revised proposals to Executive for formal vote
Budget Bill drafted and presented to Assembly
Assembly passage (timing depends on agreement complexity)
Royal Assent required before 1 April 2026

Risk Assessment: Agreement Failure

If Executive cannot agree final budget:

Immediate consequence: No legal authority to spend beyond Vote on Account provisions (typically 45% of prior year)

Historical precedent:

2021: Draft Budget published but Executive failed to endorse
Led to collapse, prolonged caretaker period, massive overspends
Secretary of State eventually imposed budget

Current risk factors:

Revaluation creates new £350m hole not in draft
Ministers already stating allocations insufficient
Health Minister historically willing to vote against
No Programme for Government to guide prioritization
Political fragmentation may prevent majority agreement

Recommendations for Securing Agreement

1. Immediate Financial Clarity:

Publish revised revenue projections with revaluation pause impact
Quantify 2025-26 overspend before seeking agreement
Present Executive with realistic, fully-costed options

2. Strategic Trade-Offs Framework:

Require each minister proposing increased allocation to identify corresponding cuts elsewhere
Make this requirement formal Executive procedure, not just ministerial request
Prevents log-rolling where all ministers support each other’s bids

3. Health Minister Engagement:

Critical priority given size of allocation and historical dissent
Consider whether transformation funding could be earmarked for Health efficiency programs
Explore multi-year efficiency targets with investment support

4. Political Agreement on Priorities:

Cannot agree budget without agreed Programme for Government priorities
Current approach of “allocations viewed through lens of PfG” insufficient
Need explicit ministerial agreement on what services can be reduced/eliminated

5. Realistic Timeline:

Eight weeks to 1 April 2026 is insufficient for complex renegotiation
May require emergency Budget Act with later refinement
Consider whether Vote on Account extension necessary

Conclusion

Securing Executive agreement on the three-year budget faces severe challenges:

Financial hole from revaluation pause must be addressed before agreement possible
Historical pattern shows Health Minister willing to vote against insufficient allocation
All ministers already stated draft allocations insufficient
No agreed priorities framework to guide trade-offs
Extremely tight timeline with multiple uncertainties unresolved

The most likely path to agreement involves Option 4 (deferring shortfall to monitoring) combined with Option 2 (reduced non-domestic rate increase), but this perpetuates undisciplined budget management rather than addressing structural issues.

The fundamental problem remains unresolved: Ministers’ collective spending aspirations far exceed available funding, with no agreed mechanism for prioritization or service reduction.

UK Government Revenue-Raising Requirement

UK Government Revenue-Raising Requirement: Core Demand Summary

The Commitment

As part of the January 2024 financial package that facilitated the return of the Northern Ireland Executive, the UK Government required a specific revenue-raising commitment from the NI Executive.

The Amount: £113 Million Annually

According to the available budget documentation:

From 2024-25 Budget Assessment: “The UK Government has indicated to the parties that it estimated a 15 per cent increase in the regional rate would yield approximately £113 million per annum for the Executive.”

From Draft Budget 2025-26: “There remains a clear need to secure additional funding for vital public services and to enable the Executive to meet the financial package commitment of raising £113 million from local funding streams.”

From Draft Budget 2026-29/30: “As well as providing additional funding for vital public services this also enables the Executive to meet the financial package commitment of raising £113 million from local funding streams.”

Key Characteristics

1. Source: “Local Funding Streams”

Must come from revenue sources controlled by the NI Executive
Cannot be met through UK Government grants or Barnett consequentials
Primary mechanism: Regional Rates (only major tax instrument available)

2. Annual Requirement

The £113 million commitment appears to be per annum
Referenced across multiple budget years (2025-26, 2026-27, 2027-28, 2028-29)
Not a one-off payment but ongoing revenue generation

3. Linked to Debt Write-Off

Part of broader financial package including up to £559 million debt write-off
UK Government agreed to write off debt from 2022-23 and 2023-24 overspends conditional on:
- Publishing a plan to deliver sustainable public finances by end of Summer 2024
- Demonstrating implementation by May 2025
- Meeting revenue-raising commitments

4. Political Context

Imposed as condition for Executive restoration
Reflects UK Government frustration with persistent NI overspending
Forces Executive to make politically difficult decisions on taxation

How the Executive Planned to Meet This Commitment

Original Approach (Draft Budget 2025-26):

Domestic Regional Rate increase: 5%
Non-Domestic Regional Rate increase: 3%
Combined effect expected to generate approximately £113 million

Continuation (Draft Budget 2026-29/30):

Same formula applied across all three years:
- Domestic: 5% annually (2026-27, 2027-28, 2028-29)
- Non-Domestic: 3% annually (2026-27, 2027-28, 2028-29)

The Critical Problem

The revenue calculations assumed:

5% domestic rate increase applied to existing domestic valuations ✓
3% non-domestic rate increase applied to NEW, HIGHER valuations from Reval 2026 ✗

With Reval 2026 paused (29 January 2026):

3% non-domestic poundage increase now applies to OLD, LOWER valuations
Expected revenue from non-domestic rates approximately 50% lower than budgeted
Creates £113 million shortfall in year 1 alone

Implications of Failure to Meet Commitment

From the documentation, the consequences are:

1. Debt Repayment Reimposed

The £559 million debt write-off was conditional
Failure to meet sustainability plan requirements (including revenue-raising) could trigger debt repayment requirement
Would need to be repaid from future budgets, creating additional pressure

2. Loss of UK Government Confidence

Undermines credibility of Executive’s fiscal management
Reduces likelihood of future financial support or flexibility
Weakens negotiating position for fiscal framework discussions

3. Brings Forward Fiscal “Cliff Edge”

The 2024-25 Budget Assessment warned: “The impact of having to repay the previous Reserve claims would be to bring forward the cliff edge by a year, into the next fiscal year”
Medium-term budgetary pressures become immediate crisis

Current Status: Commitment at Risk

The Finance Minister has:

✓ Published draft budgets showing revenue increases
✓ Communicated intention to meet commitment
✗ Failed to deliver due to Reval 2026 pause
✗ Not identified alternative revenue sources
✗ Not adjusted spending plans to reflect shortfall

The Minister’s WMS acknowledges uncertainty but provides no solution: “I will also be urging the Treasury to phase any reduction across the entire budget period, given the already constrained 2026-27 position and the damage an immediate cut would cause to public services.”

This refers to the impact of any 2025-26 overspend, not the revenue shortfall from the paused revaluation.

Why This Matters

The £113 million annual revenue-raising requirement represents:

Approximately 1.6% of total Resource DEL (~£7 billion)
Approximately 16% of total Regional Rates revenue (~£730 million)
The price of Executive restoration and debt forgiveness
A test of fiscal discipline and political maturity

The UK Government’s core message: Northern Ireland cannot continue to have more generous public services AND lower taxation than the rest of the UK AND persistent overspending AND repeated bailouts.

The £113 million requirement forces the Executive to choose: raise local revenue OR reduce services to sustainable levels.

By pausing Reval 2026 without identifying alternative revenue, the Executive has effectively chosen neither option – maintaining the pattern of fiscal indiscipline that necessitated UK Government intervention in the first place.

This risks validating UK Government skepticism about whether the restored Executive can deliver sustainable public finances, potentially triggering the consequences outlined above and further eroding Northern Ireland’s fiscal autonomy.

Assessment: Was Reval 2026 Proper and Fair?

Procedural Propriety: PARTIALLY COMPLIANT

What LPS Did Correctly:

1. Methodology Compliance

Used standard UK-wide “Fair Maintainable Trade” methodology
LPS Deputy Secretary Sharon Gallagher confirmed: “This is the tried and tested methodology that’s used across England, Scotland and Wales”
Followed established legal framework for revaluation
Applied consistent approach across all 75,000 non-domestic properties

2. Frequency of Revaluation

Fourth revaluation since 2015 (2015, 2020, 2023, 2026)
Three-year cycle represents best practice
Business community had requested more frequent revaluations to keep valuations current
Shortest interval between revaluations in any UK jurisdiction

3. Evidence Base

Used rental evidence from valuation date of 1 April 2024
Collected market data from multiple sources
Overall 15% increase reflects actual market movement across property sectors
Revenue-neutral process (poundages to be adjusted to maintain total revenue)

4. Consultation and Appeals Process

Draft list published (23 January 2026) before implementation (1 April 2026)
Businesses given opportunity to review and challenge valuations
LPS stated willingness to review “any new or relevant information ratepayers wish to bring forward”
Appeals process available with proper evidence

Significant Procedural Deficiencies:

1. Inadequate Notice Period

Draft list published January 2026 for April 2026 implementation
Only 3 months preparation time vs 5 months in England/Wales (November 2025 publication)
NI Hotels Federation: “The delayed release of valuations until January has severely limited businesses’ ability to plan, budget or challenge revised NAVs”
Insufficient time for businesses to:
- Obtain professional valuations
- Prepare appeals with supporting evidence
- Adjust business plans
- Arrange financing

2. Poor Data Quality Due to Non-Compliance

Only 30% of hospitality businesses provided turnover information
Department of Finance acknowledged: “Compliance from businesses in providing the turnover information for the hospitality sector, required to inform valuations, remains low, with only 30% of the sector providing responses”
This means 70% of hospitality valuations were estimated without actual business data
LPS had to rely on:
- Historical data
- Proxy information
- Comparables from the 30% who responded
- Assumptions about business performance

3. Absence of Impact Assessment

No analysis published of differential sectoral impacts
No consideration of cumulative pressures on hospitality
No assessment of how COVID recovery support removal would compound revaluation increases
No evaluation of whether outcomes were sustainable for affected businesses

4. No Transitional Relief Planned

Unlike England/Wales, no transitional caps on bill increases
Single-step removal of COVID support (30% of NAV increase according to NIHF)
No phased implementation despite unprecedented increases for some sectors

Substantive Fairness: FUNDAMENTALLY FLAWED

Critical Fairness Issues:

1. Methodology Treats Inflation as Business Success

The Core Problem:

Fair Maintainable Trade methodology uses turnover as proxy for property value
Turnover increased due to inflation, not real business growth
Hospitality had to raise prices to cover costs (wages, energy, food)
Methodology interprets price increases as increased capacity to pay rent
Reality: Profitability declined while turnover rose

Evidence:

NI Hotels Federation analysis:
- Inflation 2015-2026: 35.5%
- Hotel NAV increase: 90.6%
- NAV growth 2.5 times faster than inflation
- Minimum wages increased 90% (matching NAV growth, not inflation)
- Energy costs rose even faster during certain periods

Hospitality Ulster Chair Michael Cadden: “As we review the draft lists for the upcoming revaluation, it is clear that LPS is using a model that effectively treats the cost-of-living crisis as a business success.”

2. Disconnect Between Turnover and Profitability

The Hotels Federation Identified:

Turnover increased but “has not kept pace with the very significant rise in operating costs”
Room rates “softened alongside occupancy levels” in 2025
Operating cost inflation exceeded revenue growth
Methodology “places excessive emphasis on turnover while failing to adequately reflect rising wage, energy, food and service costs”

Specific Example (from Irish News reporting):

Ringland Group (4 Belfast hospitality venues):
- NAV increase: 135% across both sites
- Additional annual cost: £157,000
- Revenue increased due to inflation, not volume growth
- Profit margins compressed by cost inflation

3. Perverse Investment Incentive

NIHF Chief Executive Janice Gault: “The hotel valuation scheme further penalises investment, as improvements in quality and star classification automatically trigger higher NAVs, discouraging reinvestment in standards and visitor experience.”

This creates a disincentive for quality improvement:

Hotel invests £500,000 in refurbishment
Star rating improves
NAV increases automatically
Annual rates bill increases permanently
Investment becomes less attractive

Result: Policy conflict with Programme for Government tourism growth targets.

4. Compound Effect of COVID Support Removal

NIHF analysis: “The sudden removal of the Covid-19 rates discount has compounded this impact. The withdrawal of support in a single step has automatically increased NAVs by approximately 30%, with no transitional arrangements to reflect continued recovery, elevated debt levels or sustained cost inflation.”

Timeline of Pressures on Hospitality:

2021 (Reval 2023 valuation date): Pandemic, low valuations, COVID support active
2024 (Reval 2026 valuation date): Post-pandemic turnover recovery
Revaluation captures full swing from suppressed to recovered turnover
Plus removal of COVID support
Plus no transitional relief
Result: “Cliff edge” effect

5. Data Deficiency Undermines Accuracy

With only 30% compliance, valuations for 70% of hospitality businesses were estimated without their actual financial data. This raises fundamental fairness questions:

For Non-Compliant Businesses:

Were estimated valuations accurate?
Were they penalized for non-compliance through conservative assumptions?
Could they effectively appeal without having provided data initially?

For Compliant Businesses:

Were they disadvantaged by providing accurate data while competitors didn’t?
Did compliance result in higher valuations than non-compliant competitors?

LPS urged businesses to submit information post-publication, but this reverses proper process: valuations should be based on submitted data, not estimated then corrected.

6. Extreme Variation Within Sector

Individual property NAV increases ranged from decreases to +342%, showing:

Inconsistent application of methodology
Insufficient quality control
Possible errors in individual assessments

Examples from reporting:

Galgorm Resort (Ballymena): +127% (£1.07m increase)
Slieve Donard Hotel (Newcastle): +208% (£844k increase)
Lusty Beg Island Resort: +115%
Various pubs: +100% to +342%

Such variation suggests methodology produces arbitrary outcomes depending on business circumstances that may be irrelevant to actual property value.

Comparative Fairness: DISCRIMINATORY

Northern Ireland vs Great Britain Treatment:

Aspect	England/Wales	Northern Ireland	Fair?
Notice Period	5 months (Nov 2025)	3 months (Jan 2026)	✗
Transitional Relief	Yes (5-30% caps year 1)	None	✗
Sector Support	40% RHL relief 2025-26	None	✗
Permanently Lower Multipliers	Yes (from April 2026)	None	✗
COVID Support Removal	Phased with transitional relief	Single step, no mitigation	✗
Total Support Package	£1.5bn+ annually	Zero	✗

Outcome: NI hospitality businesses face:

Same valuation methodology
Same inflationary pressures
Higher effective tax burden (no relief)
Steeper transition (no caps)
Competitive disadvantage vs GB and Republic of Ireland

This differential treatment means:

Chain hotels/restaurants may prioritize GB investment over NI
Cross-border businesses (NI/ROI) face disadvantage in NI
Tourism competitiveness undermined

Legitimacy and Public Confidence: FAILED

Stakeholder Rejection:

Hospitality Ulster (representing sector):

“The 2026 revaluation lists show a sector facing a cliff-edge”
“Nothing fair or maintainable about rates bill increases of over 100%, 200%, and 300%”
“Fundamentally flawed” methodology
“Will be the ruination of the hospitality industry”

NI Hotels Federation:

“Sharp and unsustainable increase”
“Delivered with inadequate notice and without proper recognition of economic realities”
Called for “urgent government intervention”
Seven specific reform demands

Political Response:

UUP Economy Spokesperson Diana Armstrong: “Final nail in the coffin”
SDLP Finance Committee Chair Matthew O’Toole: “Real and understandable concern”
Alliance Deputy Leader Eóin Tennyson: “Cack-handed and muddled”

Outcome: Finance Minister John O’Dowd paused entire revaluation (29 January 2026), acknowledging:

“I have listened carefully”
“Aware of the concerns raised by businesses—particularly hotels, pubs and other hospitality businesses”
May not restart “until the outcome of a review in England”

The Minister’s retreat effectively concedes the process was not fair or sustainable.

Legal Compliance: TECHNICALLY PROPER BUT SUBSTANTIVELY QUESTIONABLE

Met Legal Requirements:

✓ Followed statutory revaluation cycle
✓ Used prescribed valuation date (1 April 2024)
✓ Applied established methodology
✓ Published draft list before implementation
✓ Provided appeals mechanism

Potential Legal Vulnerabilities:

1. Proportionality

Increases of 100-342% may fail proportionality test
No assessment of whether outcomes are reasonable
Arbitrary variation suggests flawed application

2. Legitimate Expectations

Businesses expected comparable treatment to GB
Expected transitional support given precedent
Expected consideration of economic circumstances

3. Equality

Differential treatment of sectors (hospitality vs others)
Differential treatment by jurisdiction (NI vs GB)
30% compliance rate suggests unfair application

4. Consultation Adequacy

Insufficient notice period
No impact assessment published
No consideration of alternatives

Alternative Approaches That Would Have Been Fairer:

1. Phased Implementation

Year 1: 33% of increase
Year 2: 66% of increase
Year 3: 100% of increase
Allows business adjustment

2. Transitional Caps (Matching England/Wales)

Cap increases at 5-30% depending on property value
Prevents “cliff edge” effects
Maintains fairness principle

3. Profitability Adjustment

Adjust FMT formula to account for cost inflation
Use profit margins, not just turnover
Reflects economic reality

4. Sector-Specific Relief

20-40% relief for hospitality (as in GB)
Acknowledges strategic importance
Compensates for methodology flaws

5. Improved Data Collection

Mandatory compliance with penalties
Earlier data collection deadline
Better quality assurance

6. Earlier Publication

Match England/Wales timeline (November)
Provide 5-6 months preparation
Allow proper appeals process

Conclusion: Process Was Procedurally Proper But Substantively Unfair

Dimension	Assessment	Rating
Legal Compliance	Met statutory requirements	✓ PROPER
Methodological Consistency	Applied standard UK formula	✓ PROPER
Process Transparency	Published draft list, appeals available	✓ PROPER
Notice Period	3 months vs 5 in GB	✗ IMPROPER
Data Quality	Only 30% compliance	✗ IMPROPER
Substantive Fairness	Treats inflation as prosperity	✗ UNFAIR
Economic Realism	Ignores profitability collapse	✗ UNFAIR
Comparative Treatment	No relief vs £1.5bn in GB	✗ UNFAIR
Transitional Support	None vs phased in GB	✗ UNFAIR
Outcome Proportionality	100-342% increases unsustainable	✗ UNFAIR
Stakeholder Confidence	Universal rejection, Ministerial retreat	✗ FAILED

Final Verdict:

The Reval 2026 process was procedurally proper in a narrow legal sense but fundamentally unfair in substance and application.

The process followed correct legal procedures but produced outcomes that:

Are economically unsustainable for affected businesses
Treat inflation-driven turnover growth as real business success
Ignore profitability erosion from cost inflation
Provide no transitional support unlike rest of UK
Were rejected by all major stakeholders
Required Ministerial intervention to pause

The Finance Minister’s decision to halt the revaluation effectively validates the sector’s complaints that the process, while technically proper, was substantively unfair.

The core issue: A methodology that works acceptably in stable economic conditions produces perverse outcomes during high inflation. LPS applied the rules correctly, but the rules themselves are flawed in current circumstances—something England is now reviewing, and which should have been considered before NI implementation.

Proper process ≠ Fair outcomes. Reval 2026 demonstrates this distinction clearly.

Why Did Minister O’Dowd Use Reval 2026 Revenue Figures in Budget Despite Flawed Process?

The Chronological Contradiction

23 January 2026: LPS publishes draft Reval 2026 valuations

Immediate outcry from hospitality sector
Complaints about 100-342% increases
Industry bodies call it “fundamentally flawed”

27 January 2026 (estimated): Finance Minister publishes Draft Budget 2026-29/30

Budget assumes 3% non-domestic rate increases across 3 years
Revenue projections implicitly rely on Reval 2026 increasing the valuation base by 15%
No contingency for revaluation being paused or modified

28 January 2026: Hospitality Ulster intensifies pressure

Colin Neill warns “no action will be off the table”
Finance Committee hearings reveal problems
Political pressure mounting

29 January 2026: O’Dowd announces revaluation pause

“I have listened carefully”
May not proceed “until the outcome of a review in England”
Effective admission the process was problematic

30 January 2026 (this morning): O’Dowd states he has “full confidence in LPS”

Claims LPS produced accurate figures
Affirms confidence in the organization that conducted the “flawed” revaluation
Creates fundamental logical contradiction

The Core Contradiction: Full Confidence in Paused Work

If O’Dowd has “full confidence” in LPS and their figures, why did he pause the revaluation?

There are only three possible answers, all deeply problematic:

Answer 1: The Figures Are Accurate But Politically Unacceptable

What this means:

LPS correctly applied the methodology
The valuations accurately reflect Fair Maintainable Trade
The 100-342% increases are technically justified
But the political pressure was too great to proceed

Implications:

O’Dowd is prioritizing political expediency over fiscal responsibility
He’s acknowledging that correct valuations are unaffordable
The pause is purely political theatre, not a technical correction
He knew the figures were correct when he used them in the budget
He paused implementation to appear responsive while keeping the revenue in the budget

This is the most cynical interpretation – and likely the accurate one.

Answer 2: The Figures Are Inaccurate But He Still Has Confidence

What this means:

LPS made errors (30% compliance, flawed methodology application)
The valuations need to be corrected
But O’Dowd still has “full confidence” in the organization that produced flawed work

Implications:

Meaningless political statement (“full confidence” = nothing)
Protecting LPS officials from accountability
Refusing to acknowledge systemic problems
He used figures he knew were inaccurate in the budget

This suggests either incompetence or deliberate deception.

Answer 3: He Doesn’t Actually Have Full Confidence

What this means:

The “full confidence” statement is political cover
He knows LPS work was problematic
But he can’t publicly criticize them because:
- They’re within his own department
- He’s ultimately accountable for their work
- Admitting they failed means admitting he failed

Implications:

Public statements are performative, not honest
Unwilling to hold officials accountable
Budget credibility undermined by known flawed assumptions
Systemic dishonesty in public discourse

This is the “say one thing, do another” politician’s approach.

What “Full Confidence” Actually Means in This Context

In political discourse, “full confidence” statements have specific meanings:

When a Minister says they have “full confidence” in officials who just produced controversial work, it typically means:

“I’m not sacking them” – Protection of civil servants from political fallout
“Don’t blame them, blame me” – Taking ministerial responsibility (theoretically)
“The methodology was sound” – Technical procedures were followed correctly
“This is political, not technical” – The problem is implementation circumstances, not professional competence

But it creates an insurmountable logical problem:

If the figures are sound → why pause the revaluation? If the figures are flawed → why “full confidence”?

You cannot simultaneously:

Have “full confidence” in the figures produced, AND
Refuse to implement those figures, AND
Maintain credibility

Yet that’s precisely what O’Dowd is attempting.

The Updated Timeline With the “Full Confidence” Statement

Let’s examine the sequence with this new information:

Stage 1: Use the Figures (27 January)

Budget published with revenue projections dependent on Reval 2026
Implicitly endorses LPS work
Stakes entire fiscal plan on these valuations

Stage 2: Pause the Figures (29 January)

Announces revaluation will not proceed
“I have listened carefully”
Will wait for England’s review
Implicitly admits figures are problematic

Stage 3: Defend the Figures (30 January – this morning)

States “full confidence in LPS”
Affirms the organization that produced the paused valuations
Explicitly contradicts the pause decision

This is not a coherent policy position – it’s political damage control that creates more damage.

Why the “Full Confidence” Statement Makes Everything Worse

Problem 1: Destroys Budget Credibility

If O’Dowd has full confidence in LPS figures:

The £113 million revenue projection should be reliable
The budget should proceed as published
Departments can trust their allocations

But he paused the revaluation:

The £113 million will not materialize
The budget cannot proceed as published
Departments cannot trust their allocations

The “full confidence” statement forces us to conclude:

Either the Minister doesn’t understand what he’s saying, OR
He’s deliberately misleading the Assembly and public

Problem 2: Undermines Justification for Pause

Possible justifications for pausing revaluation:

❌ “The figures are wrong” – Contradicted by “full confidence” statement ❌ “The methodology is flawed” – LPS used UK-wide standard methodology he claims to have confidence in ❌ “The data quality is poor” – But he has “full confidence” in LPS who collected the data ❌ “The process was rushed” – But LPS followed the established timetable he approved ✓ “The political pressure was too great” – ONLY remaining explanation

The “full confidence” statement eliminates all technical justifications, leaving only political cowardice.

Problem 3: Prevents Learning and Improvement

If LPS has done nothing wrong:

No need to review their processes
No need to improve data collection (30% compliance acceptable)
No need to consider transitional relief
No need to adjust methodology for high inflation periods

Result: Next revaluation (2029) will face identical problems because no lessons learned.

The “full confidence” statement locks in future failure.

Problem 4: Accountability Vacuum

Who is responsible for this mess?

LPS? No – Minister has “full confidence” in them
Methodology? No – It’s UK-wide standard, used correctly
Hospitality sector? No – They complied with consultation
O’Dowd? No – He “listened” and responded to concerns
UK Government? Implied – “waiting for England’s review”

Nobody is accountable. Nothing will change. Problem will recur.

The Real Reason for “Full Confidence” Statement

Let’s be clear about why O’Dowd made this statement:

Reason 1: Protecting the Civil Service

Political convention:

Ministers take political responsibility
Civil servants implement policy professionally
Ministers don’t publicly criticize their officials

But this convention assumes:

Civil servants followed ministerial direction
Technical work was competent
Problems arose from policy choices, not implementation

In this case:

LPS followed correct methodology
But produced politically unsustainable outcomes
Minister is protecting them from becoming scapegoats

This is defensible – but incompatible with pausing their work.

Reason 2: Avoiding Compensation Claims

Critical legal consideration:

If O’Dowd admits LPS valuations were flawed:

Every business could claim their valuation is inaccurate
Appeals process becomes rubber-stamp for reductions
Revenue projections collapse further
Legal liability for businesses that paid rates based on flawed valuations

If he maintains “full confidence”:

Valuations remain technically valid
Appeals require evidence to overturn
Pause is “temporary” pending policy review, not correction of errors
Limited legal liability

This is risk management – but creates fiscal chaos.

Reason 3: Preserving Option to Restart

Strategic flexibility:

If O’Dowd admitted figures were wrong:

Cannot use them ever
Must start revaluation from scratch
Lose years of work and investment
Admit complete failure

If he maintains figures are sound:

Can restart revaluation after political heat diminishes
Or after England’s review provides cover
Or after transitional relief package developed
Or after next election (someone else’s problem)

This keeps options open – but at cost of coherence.

Reason 4: Maintaining Budget Fiction

The most cynical explanation:

If O’Dowd admits LPS figures are unreliable:

Must revise budget revenue projections
Must reduce departmental allocations immediately
Must admit UK Government revenue commitment cannot be met
Budget consultation becomes pointless (built on false numbers)

If he maintains “full confidence” in figures:

Budget stays as published
Revenue projections officially unchanged
Can defer spending cuts to monitoring rounds
Political problem kicked down the road
£350 million shortfall remains hidden in the budget

This allows him to continue the fiction that the budget is balanced and deliverable.

What O’Dowd Should Have Said (But Couldn’t)

Honest Statement Option 1: “The methodology needs reform”

“LPS has applied the standard UK-wide methodology correctly and professionally. However, that methodology produces unsustainable outcomes in current economic conditions where inflation has driven turnover growth without corresponding profitability increases. I have asked officials to work with counterparts in England, Scotland and Wales to develop an improved methodology that better reflects economic reality. In the meantime, I am pausing implementation of Reval 2026.”

Why he couldn’t say this:

Admits budget revenue projections are wrong
Requires immediate spending cuts or tax increases
Opens legal challenges to entire rates system
No time to develop new methodology before April

Honest Statement Option 2: “We need transitional relief”

“The Reval 2026 valuations are technically accurate but the impact on individual businesses is too severe without transitional support. I am pausing implementation to allow time to develop a transitional relief package similar to England and Wales, with caps on annual increases. This will cost approximately £40-50 million in year one, which I will fund through [specific source].”

Why he couldn’t say this:

Requires identifying £40-50 million in cuts elsewhere
Admits Northern Ireland’s fiscal position cannot accommodate standard UK policy
Reduces net revenue gain to £60-70 million (inadequate for UK Government commitment)
Executive colleagues would not agree to fund hospitality relief

Honest Statement Option 3: “I made a mistake”

“I published a budget that assumed Reval 2026 would proceed as planned. The scale of stakeholder concern has demonstrated this assumption was incorrect. I am withdrawing the draft budget and will publish a revised version that does not depend on revaluation revenue. This will require reduced departmental allocations totaling approximately £113 million in 2026-27.”

Why he couldn’t say this:

Political suicide
Executive colleagues would revolt
Budget process would collapse
Confirms fiscal incompetence
UK Government would question capacity for self-governance

The “Full Confidence” Statement Reveals the Strategy

By stating he has “full confidence in LPS,” O’Dowd is signaling his actual strategy:

The Plan:

✓ Publish budget assuming Reval 2026 proceeds (creates revenue)
✓ Pause Reval 2026 under political pressure (appears responsive)
✓ Maintain “full confidence” in LPS figures (keeps revenue in budget)
Wait for England’s methodology review (kicks can down road)
Blame UK Government for fiscal constraints (shifts responsibility)
Restart revaluation after election or with relief package (someone else’s problem)
OR continue with overspending and seek Westminster bailout (historical pattern)

The “full confidence” statement is essential to Step 3:

If he loses confidence in the figures:

Revenue projection collapses
Budget becomes obviously undeliverable
Must take immediate action

If he maintains confidence in the figures:

Revenue projection stays in budget (on paper)
Can present budget as balanced
Shortfall becomes “monitoring round issue”
Politically manages crisis without fiscal consequences (yet)

What This Means for Budget Credibility

The Draft Budget 2026-29/30 now contains:

Revenue Assumptions:

✓ 5% domestic rate increase (credible)
✗ 3% non-domestic rate increase applied to NEW valuations (incredible – revaluation paused)
✗ £113 million annual revenue gain (incredible – cannot be achieved)

But Minister maintains:

✓ “Full confidence” in the valuations (suggests they’re accurate)
✗ Valuations will not be implemented (suggests they’re not usable)

Spending Allocations:

Departments given 3-year envelopes totaling £61.1 billion
Based on revenue that will not materialize
No adjustments announced
Consultation proceeding as if budget deliverable

Logical conclusion: Every departmental allocation in the published budget is overstated by approximately 0.6% annually (£113m shortfall / £19.9bn total), with no mechanism to correct this before final budget.

The Historical Pattern O’Dowd Is Repeating

This is not new behavior – it’s Northern Ireland’s established fiscal dysfunction:

2022-23:

Overspend £661 million (4.6%)
“We’ll manage it in-year”
Required £297 million Reserve claim

2023-24:

Overspend £262 million
“We’ll manage it in-year”
Required another Reserve claim
Led to £559 million debt

2024-25:

Opening budget appeared balanced
Health Minister voted against (insufficient funding)
Current overspend unknown
“We’ll manage it in-year”
O’Dowd: “Some Ministers have acted responsibly” [others haven’t]

2026-27 (current):

Draft budget appears balanced
Built on revenue that won’t materialize
Minister has “full confidence” in paused valuations
No spending adjustments made
“We’ll manage it in-year”

The pattern:

Publish optimistic budget
Face political pressure
Retreat from revenue measures
Maintain spending commitments
Overspend materializes
Blame circumstances/Westminster
Seek bailout
Repeat

O’Dowd’s “full confidence” statement is essential to maintaining this cycle because it prevents acknowledgment that the budget is undeliverable.

Why This Matters More Than Normal Political Spin

This isn’t just political rhetoric – it has real consequences:

For Departments:

Planning 2026-27 spending based on inflated allocations
May hire staff, commit contracts, announce programs
Will face mid-year cuts when revenue shortfall emerges
Disruption to service delivery
Undermines already weak public sector planning

For Businesses:

Uncertainty about actual rates bills for 2026-27
Cannot plan investments or pricing
May face revaluation being restarted with different rules
Competitive disadvantage vs England/Wales continues
Trust in government process destroyed

For UK Government:

Executive failing to meet £113 million revenue commitment
Pattern of fiscal indiscipline continues despite conditions on debt write-off
Questions about capacity for self-governance
May trigger debt repayment requirements
Undermines case for fiscal framework/additional powers

For Democratic Accountability:

Assembly asked to scrutinize undeliverable budget
Consultation process is theatre (based on false numbers)
Final budget will inevitably differ from draft
Public cannot meaningfully engage with fiction
Undermines legitimacy of entire budget process

For Fiscal Sustainability:

Perpetuates culture of optimistic assumptions
Prevents honest conversation about choices
Delays necessary reforms
Accumulates future problems
Validates skeptics who claim Northern Ireland cannot manage its finances

The Questions O’Dowd Must Answer

The “full confidence” statement creates obligations:

Question 1: If you have full confidence in LPS valuations, why did you pause implementation?

Question 2: If the valuations are accurate, why does your budget assume revenue from them while simultaneously refusing to collect that revenue?

Question 3: If you lack confidence in the valuations, why did you use them as the basis for a three-year budget?

Question 4: How do you reconcile “full confidence” in the technical work with “listening carefully” to concerns about the outcomes?

Question 5: What specific aspect of England’s review are you waiting for, given that LPS used the same methodology you claim to have confidence in?

Question 6: If the figures are sound, will you restart the revaluation after England’s review regardless of its conclusions?

Question 7: If the figures are unsound, when will you revise the budget to reflect accurate revenue projections?

Question 8: How will you meet the UK Government’s £113 million annual revenue-raising commitment without the revaluation?

Question 9: Do you acknowledge that departmental allocations in the draft budget are now unreliable due to the revaluation pause?

Question 10: What is your timeline for publishing revised budget figures that reflect the actual revenue position?

None of these questions have satisfactory answers under the “full confidence” position.

The Ultimate Explanation: Political Cowardice Dressed as Confidence

Why did O’Dowd proceed with Reval 2026 figures despite knowing the process was flawed, and then claim “full confidence” after pausing it?

Because he is attempting to:

Appear fiscally responsible (published balanced budget)
Appear politically responsive (paused controversial revaluation)
Avoid accountability (maintains figures are sound, just not using them)
Defer consequences (keeps revenue in budget despite pausing collection)
Protect officials (full confidence prevents scapegoating)
Maintain flexibility (can restart revaluation later)
Shift blame (waiting for England, implying methodology is UK-wide problem)

This requires:

Using figures he knows are problematic
Pausing collection of revenue he’s budgeted for
Claiming confidence in work he’s refusing to implement
Maintaining spending plans based on income he won’t receive

It is simultaneously:

Clever political management (short-term)
Fiscal irresponsibility (long-term)
Intellectually dishonest (always)
Historically familiar (Northern Ireland pattern)

The “full confidence” statement is the keystone that holds this contradictory position together:

Without it, he’d have to either:

Admit the figures are wrong → revise budget → cut spending, OR
Defend the figures as right → proceed with revaluation → face political heat

The “full confidence” statement allows him to do neither while claiming to do both.

This is not leadership. This is survival.

And it’s why Northern Ireland remains trapped in a cycle of fiscal dysfunction that even conditional debt write-offs and UK Government oversight cannot break.

That’s not governance. That’s political theatre at the expense of fiscal reality