Unpacking the 2025 Comprehensive Spending Review for Northern Ireland

The 2025 Comprehensive Spending Review (CSR) was the first undertaken by a Labour Government since 2007, and was delivered amidst significant global challenges. In her speech on 11 June 2025, the UK Chancellor acknowledged a number of on-going conflicts and economic uncertainties, notably US tariffs and the global response to those tariffs. She also reminded UK people and business that “difficult, but necessary decisions” had to be taken to address “long-term challenges the country faces”, requiring “fundamental reform”. Alongside her speech, the new Statement of Funding Policy, Northern Ireland Interim Fiscal Framework Implementation Update and a Review of the Treasury Green Book were also published, which will inform future decision-making in central and devolved government across the UK. So, what does all this mean for Northern Ireland – its Executive, people and businesses?

Statement of funding policy

The UK Government (UKG) published the latest version of the Statement of Funding Policy (SFP – Eleventh Edition). It sets out UKG “rules”, which help to define the financial arrangements under current devolution; empowering UKG to allocate a “spending envelope” to each Devolved Administration (DA) – comprising:

• Block Grant (Barnett and non-Barnett), which equates to the Executive’s Departmental Expenditure Limits (DEL) allocation from Treasury
• Demand-led Annually Managed Expenditure (AME), for example, social security, pensions.

Amongst other things, this Edition of the SFP notably included the “needs-based factor” specified under the agreed Northern Ireland Executive Interim Fiscal Framework (IFF). Simply stated, the IFF specified the UKG is to allocate the Executive 124% of what each Whitehall Department receives during the CSR period, up to 2029/30, when Northern Ireland block grant funding (determined by the Barnett formula) falls below 124% relative to equivalent UKG funding in England. Moreover, the CSR policy paper confirmed that the UKG would “immediately begin negotiations on a full Northern Ireland Executive Fiscal Framework”, while stating those negotiations are to include:

…Northern Ireland Housing Executive borrowing and the Holtham Review of Northern Ireland’s relative need.

Also notable for Northern Ireland in the CSR policy paper were the UKG adjustments to Northern Ireland’s agriculture funding allocation. The published methodology explained that the agriculture funding allocated to Northern Ireland – amounting to £329 million (m) – was now no longer earmarked and was excluded from the Executive’s “Total” DEL. Such funding therefore was not part of the relative funding calculation determining the Executive’s block grant allocation from UKG.

And following the Chancellor’s CSR announcement on 11 June, the Northern Ireland Minister of Finance indicated the significance of the IFF agreement and its relative funding methodology, when he stated:

Without this agreement the Executive would have received £600 million less in funding over the Spending Review period.

Chancellor’s allocations from a Northern Ireland perspective

From 2026/27 to 2028/29, the Northern Ireland Executive (Executive) is to directly receive a total of £19.3 billion (bn) on average per year, including resource and capital, which comprises the Executive’s Total DEL allocation. This includes an additional £1bn resource funding that UKG has allocated to the Executive for 2026/29; plus an additional £220m capital funding from 2026/27 to 2029/30. Barnett consequentials are “unhypothecated”, meaning HM Treasury does not earmark them for a specific purpose; and upon receipt, the Northern Ireland Executive may allocate them using its discretion.

Direct funding to the Executive

Further to the block grant, allocations determined under the Barnett formula, the UKG announced targeted funding for the Executive for specific programmes and projects not determined under Barnett, outside the block, as highlighted here.

Casement Park Stadium

Notably, the Chancellor announced £50m to support the Executive in redeveloping the Casement Park Stadium. However, there was a lack of clarity regarding the form these monies would take. Seeking to clarify thereafter, the Northern Ireland Finance Minister spoke at the 16 June Northern Ireland Assembly plenary, explaining the £50m would be in the form of Financial Transactions Capital (FTC – typically, this type of funding requires repayment). That same day, the UKG, announced it would be provided as an “equity stake” (traditionally, that means the UKG would take part ownership in the project); followed on 18 June with Department of Finance (DoF) officials making clear to the Assembly’s Committee for Finance that the details still were to be worked out regarding equity-based FTC. A couple days later, responding to a Parliamentary Question on 20 June in the House of Commons, the Chief Secretary to the Treasury confirmed what DoF had said in Committee, stating:

The UK Government has provided £50m of Capital Financial Transactions funding to redevelop Casement Park. The UK Government will continue to work with the Northern Ireland Executive, however it is up to the Executive to design and implement the Financial Transaction. The Financial Transaction will be provided to the Executive on a net basis, it does not need to be repaid to the UK Government and the Executive can recycle any repayments indefinitely.

The above suggests the Executive will not have to repay the £50m to Treasury, but there will be a repayment mechanism for the investment that is to come to the Executive. That, however, has not been confirmed; and inevitably, several questions naturally arise about the arrangements relating to this funding – including, how will they operate, be managed and specify the relationship between individual project stakeholders?

And while this £50m Casement Park Stadium allocation has been welcomed, it – combined with already committed funding for this project from the Executive, the UK Government, the Irish Government and the Gaelic Athletic Association (GAA) – collectively, they still do not meet the current estimated cost for the Stadium. That previously was reported to be “well over £270 million“. Questions therefore remain as to how this existing significant funding gap could be met; and speculation appears to have focussed on stakeholder co-operation.

Public Service Transformation funding

A further £469m was allocated for the Executive from the 2024 Restoration Financial Package, including £185m for Public Service Transformation funding. This is in addition to the £2.15bn provided to the Executive under the February 2024 Funding Package

Miscellaneous allocations by the Chancellor

The Chancellor also allocated funding to the Executive in the form of:

• £113m for the Police Service of Northern Ireland’s Additional Security Fund in between 2026/27 and 2029/30;
• £24m for the Executive Programme on Paramilitarism and Organised Crime in between 2026‑27 and 2029-30 – topping up the £45.8m provided in 2025/26;
• £1m for Community Development projects over the next three years – 2026/27-2028/29;
• Access to Devolved Nations specific funding from 2026‑27 to 2029‑30, which is to be shared across Northern Ireland, Scotland and Wales, in the form of:
  • British Business Bank’s Nations and Regions Investment Programme, with funding of £350m available; and,
  • Great British Energy Power Schemes for community energy or rooftop solar for public buildings, with funding of £9.3m provided.
• From 2025-26 the Executive’s capital borrowing capacity will increase each year using the OBR’s GDP deflator, therefore, for 2025-26 the Executive can borrow £226 million – with the overall cap remaining £3 billion on outstanding debt

Indirect funding to Northern Ireland

The Chancellor has made a number of other funding allocations of potential benefit to Northern Ireland, as explained below.

Local Growth Fund

At the conclusion of the CSR, the Chancellor announced that the new Local Growth Fund to support regional growth across the UK, including Northern Ireland, has been established. And for 2026/27 to 2028/29, Northern Ireland is to receive funding across a number of schemes under this Fund, at the same overall level in cash terms as funding allocated under the 2025/26 UK Shared Prosperity Fund (UKSPF) – amounting to over £45m for 2025/26 UKSPF.

The Northern Ireland Office (NIO) is to implement the Local Growth Fund in “partnership” with the Executive, as noted by the Chancellor subsequent to her CSR announcement. However, what form such a “partnership” will take and how it will operate in practice remains to be seen; necessitating a further watching brief – this time to track what projects will be funded under this Fund and how those projects will align with the Executive’s Programme for Government (PfG).

City and Growth Deals

In terms of the City and Growth Deals, the Chancellor confirmed in her CSR announcements, £310m for all four existing Deals in Northern Ireland for the next four years; eliminating any doubts prevailing since September 2024.

Business Sector Support

At the CSR, the Chancellor also made funding announcements relating to Northern Ireland firms – available over the next four years, up to 2029/30 and allocated on an individual firm basis. They include:

• £3bn for the advanced manufacturing sector to anchor the supply chain of zero emission vehicles, batteries and ultra-low and zero-carbon emission aircraft.
• £22.6bn per year by 2029/30 of increased UK Research & Development (R&D) spending.

It is hoped that Northern Ireland firms will benefit from the above. Naturally, however, there are no guarantees, as it will depend on the firms that apply and their ability to compete and successfully obtain the funding. All that will inform – at least in part – any benefit arising from the above funding, for the wider Northern Ireland economy. And any such benefit will be determined in part by the types of firms securing that funding and thereafter their success, and the sectors in which they will operate and impact.

Accompanying this announcement, the Chancellor confirmed Enhanced Investment Zone in Northern Ireland. However, no additional funding announcement or timeframe was provided. Though the Chancellor did explain that the Zone intends to support key industries to growth, she did not specify what industries, nor the sectors, and how they will be identified going forward.

Winter Fuel Payment

The Chancellor also confirmed a reversal to the UKG’s July 2024 change to the Pensioners’ Winter Fuel Payment. Now, she made clear that there will be an increase in the means test threshold, to £35,000. This change extends to Northern Ireland, as confirmed by the Northern Ireland Minister for Communities during the 10 June Assembly plenary. The new threshold will be welcomed by the reported 250,000 pensioners in Northern Ireland who are anticipated to benefit, including many pensioners in lower and middle income households in Northern Ireland.

Closing reflections

As the Northern Ireland Finance Minister acknowledged during the 16 June Assembly plenary, the Chancellor’s announcements regarding the CSR outcome provide the Executive with a level of funding certainty over the next 3-4 years. He stated that it gave:

…the Executive the opportunity to set their first multi-year Budget in over a decade.

However, the funding announced will likely not match the level required to address the considerable pressures facing the Executive, which presents individual Ministers with many challenging decisions. For example, to fund daily public service delivery and to invest in projects aimed to grow Northern Ireland’s economy: how will the Executive as a whole choose to prioritise policy and budget, as it faces urgent, competing issues and needs? And in turn, how will individual Ministers do the same? Will the Executive as a whole and individual Ministers choose to exercise their existing powers in a manner enabling them to “top up” what they receive from UKG? Will they exercise their fiscal levers and raise revenue, and/or use their borrowing powers? As we go forward, much remains to be seen – and watching briefs abound.

Please note that this article was completed on 4 July 2025.