A Treasury review has suggested that Northern Ireland's Stormont government could generate an additional £3 billion annually for public services by implementing significant financial reforms, including increased property taxes, new water charges, and substantial public sector workforce reductions.
The analysis, conducted after the Northern Ireland Executive overspent by £400 million last year, identifies several key areas where revenue could be increased or savings realized. According to the review, aligning Northern Ireland's domestic rates with England's council tax levels would raise over £400 million per year, increasing the average household bill from approximately £1,200 to nearly £1,800.
Additionally, introducing water charges of around £465 per household would generate a further £357 million annually. The review also highlights potential savings from restructuring the public sector, noting that Northern Ireland employs proportionally more public sector workers than England.
"If the civil service was cut back to the equivalent size of the service in England it would save almost £400m a year," the review states, though it clarifies this example is "illustrative" and doesn't account for all considerations.
The most substantial potential savings identified involve ending the policy of "pay parity," which ensures public sector workers in Northern Ireland receive compensation comparable to their counterparts in other UK regions. The review suggests modifying this policy could save up to £2.5 billion annually, though such changes have previously sparked industrial action when implemented for certain positions.
The Treasury conducted this "open book review" independently after the Northern Ireland Department of Finance withdrew from the joint exercise. A senior official recently told Members of the Legislative Assembly that the department pulled out because it wasn't given adequate time to verify the Treasury's assumptions and calculations.
These proposed measures come as Stormont faces ongoing financial pressures, with watchdog organizations previously identifying pay agreements as a primary driver of budget overruns. The review's findings present both revenue-raising opportunities and politically challenging decisions for Northern Ireland's devolved government.