Stormont House Agreement Financial Annex

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Country/entity: Ireland
United Kingdom
Northern Ireland
Region: Europe and Eurasia
Agreement name: Stormont House Agreement Financial Annex
Date: 23 Dec 2014
Agreement status: Multiparty signed/agreed
Interim arrangement: Yes
Agreement/conflict level: Interstate/intrastate conflict(s)
Northern Ireland Conflict (1968 - 1998)
Commonly referred to as ‘the Troubles’, the most recent conflict over the territory of Northern Ireland can be framed as beginning in 1968 and ending with the Belfast Agreement (also known as the Good Friday Agreement) in 1998. While the genesis of the conflict was closely related to pressures for the state to reform with relation to discrimination against the (minority) Catholic population, the core issue of the conflict as it proceeded was the constitutional status of Northern Ireland, which was contested between the unionist/loyalist (mostly Protestant) majority, who wanted the territory to remain as part of the United Kingdom, and the nationalist/republican (mostly Catholic) minority, whose goal was to unite the six provincial counties with the Republic of Ireland. The thirty years prior to the Belfast or Good Friday Agreement were marked by inter-communal violence, active paramilitary groups, and the deployment of the British army in the province. Mediation by international actors, and dialogue between the British and Irish governments, and between the IRA and its representatives and the British Government eventually resulted in a ceasefire respected by the majority of combatants. Talks led to the Belfast or Good Friday Agreement which established a power-sharing system of governance between nationalist and unionist communities.
Stage: Implementation/renegotiation
Conflict nature: Government/territory
Peace process: Northern Ireland peace process
Parties: UK Government
Third parties: -
Description: This is a financial annex to the Stormont House Agreement in which the UK government makes financial commitments to Northern Ireland, to underwrite and implement that agreement.

Agreement document: UK_IE_141223 Stormont House Agreement Financial Annex.pdf (opens in new tab) | Download PDF

Groups

Children/youth: Groups→Children/youth→Rhetorical
Page 3, Peace and Investment Fund
The Government recognises the need for investment in the future of Northern Ireland. That is why as part of the economic pact: - we contributed an additional €50m towards PEACE IV funding. The Executive will be able to use PEACE IV funding in ways consistent with the programme, including to support the United Youth Programme;...
Disabled persons: No specific mention.
Elderly/age: No specific mention.
Migrant workers: No specific mention.
Racial/ethnic/national group: No specific mention.
Religious groups: No specific mention.
Indigenous people: No specific mention.
Other groups: No specific mention.
Refugees/displaced persons: No specific mention.
Social class: No specific mention.

Gender

Women, girls and gender: No specific mention.
Men and boys: No specific mention.
LGBTI: No specific mention.
Family: No specific mention.

State definition

Nature of state (general): No specific mention.
State configuration: No specific mention.
Self determination: No specific mention.
Referendum: No specific mention.
State symbols: No specific mention.
Independence/secession: No specific mention.
Accession/unification: No specific mention.
Border delimitation: No specific mention.
Cross-border provision: No specific mention.

Governance

Political institutions (new or reformed): No specific mention.
Elections: No specific mention.
Electoral commission: No specific mention.
Political parties reform: No specific mention.
Civil society: No specific mention.
Traditional/religious leaders: No specific mention.
Public administration: No specific mention.
Constitution: No specific mention.

Power sharing

Political power sharing: No specific mention.
Territorial power sharing: No specific mention.
Economic power sharing: No specific mention.
Military power sharing: No specific mention.

Human rights and equality

Human rights/RoL general: No specific mention.
Bill of rights/similar: No specific mention.
Treaty incorporation: No specific mention.
Civil and political rights: No specific mention.
Socio-economic rights: No specific mention.

Rights related issues

Citizenship: No specific mention.
Democracy: No specific mention.
Detention procedures: No specific mention.
Media and communication: No specific mention.
Mobility/access: No specific mention.
Protection measures: No specific mention.
Other: No specific mention.

Rights institutions

NHRI: No specific mention.
Regional or international human rights institutions: No specific mention.

Justice sector reform

Criminal justice and emergency law: No specific mention.
State of emergency provisions: No specific mention.
Judiciary and courts: No specific mention.
Prisons and detention: No specific mention.
Traditional Laws: No specific mention.

Socio-economic reconstruction

Development or socio-economic reconstruction: Socio-economic reconstruction→Development or socio-economic reconstruction→Socio-economic development
Page 3-4, Peace and Investment Fund
The Government recognises the need for investment in the future of Northern
Ireland. That is why as part of the economic pact:
...- the Government provided an extra £100m of RRI borrowing which is being used to build shared schools and shared housing; and - we are currently looking at the potential to gift surplus properties for the provision of shared housing.
The Government's existing contribution to these important aims should be recognised and any further contribution will be expected to deliver further progress. However, the Government recognises the need to progress this type of investment more quickly. It will, therefore, fund a programme of investment projects in shared and integrated education. It will contribute up to £50m of new capital funding per year for the next ten years (starting in 2015-16) subject to individual projects being agreed between the Executive and the Government.
National economic plan: [Summary: The agreement in its entirety provides a national economic plan for implementing commitments made in the Stormont House Agreement].

Page 1, Summary
The UK Government has seriously considered the proposals put forward by the party leaders. It has tried to respond as positively as possible but this package reflects the difficult fiscal environment facing all governments and the need to be fair to all parts of the United Kingdom. This package of support has the full endorsement of the Prime Minister. The total value of the Government’s package is additional spending power of almost £2 billion. This is made up of up to £650m of new and additional funding; flexibilities that protect £900m of resource spending (normally ring fenced for capital); and additional capital borrowing of up to £350m. These measures could also help to generate year on year savings of around £500m.

Page 1, Summary
The specific measures include:
• up to £150m over 5 years to help fund the bodies to deal with the past;
• flexibility to use £700m of capital borrowing to fund a voluntary exit scheme over a period of 4 years with £200m in 2015-16, £200m in 2016- 17, £200m in 2017-18 and £100m in 2018-19;
• a contribution of up to £500m over 10 years of new capital funding to support shared and integrated education subject to individual projects being agreed between the Executive and the Government;
• up to an additional £350m borrowing for infrastructure projects with a profile over four years with £100m in 2015-16, £100m in 2016-17, £100m in 2017-18 and £50m 2018-19;
• allowing the proceeds of specific agreed asset sales to be retained in their entirety and exceptionally consideration of these funds being used for a combination of both capital and resource spending;
• flexibility to repay both the £100m loan from the Treasury and £114m welfare deductions from asset sales and capital budgets; and
• if the implementation of welfare reform is completed during 2015-16 (including the relevant secondary legislation) the £114m deduction will be reduced to reflect the proportion of the year prior to implementation of the measures.

Page 2, Summary
This represents a substantial package of support that ensures that the parties can deliver against all of their priorities. An implementation plan for the delivery of the commitments made must be agreed with the Government and this will include the efficiency measures needed to put Executive finances on a sustainable basis for the future. In the light of the importance placed by the Government on security, the Government expects Executive parties to protect PSNI budgets (and community policing in particular) from significant reductions.

Page 2, Repayment of access to the Reserve
Following agreement of a balanced budget the Government will allow the £100m loan from the Treasury to be repaid from asset sales. This means that the Executive will have a further £100m of resource spending available in 2015-16.

Page 2-3, Restructuring - a voluntary exit scheme
The Government will allow £700m of RRI capital borrowing to be used to help deliver a voluntary exit scheme. Whitehall departments have been expected to deliver equivalent schemes from their current expenditure. This offer protects £700m of resource spending that would be needed to fund the scheme. This would be £200m in 2015-16, £200m in 2016-17, £200m in 2017-18 and £100m in 2018-19. This flexibility is only available to fund a voluntary exit scheme. The Government believes that this remains an effective way to deliver the proposals. Each £100m of borrowing will cost between £3-4m a year in loan repayments, but will yield annual savings in excess of £50m. These are savings that could be used to deliver other priorities including investment in social outcomes projects.

Page 3, Restructuring - a voluntary exit scheme
The Government has reflected on concerns that this approach would limit the access to borrowing for important capital projects. It therefore proposes that in addition to the borrowing for the voluntary exit scheme, from the existing RRI allocation, further capital borrowing will be made available. This will provide up to an additional £350m of borrowing to support important capital investment in projects to support economic growth. The spending profile is across 4 years with £100m in 2015-16, £100m in 2016-17, £100m in 2017-18 and £50m in 2018-19.

Page 3-4, Peace and Investment Fund
The Government recognises the need for investment in the future of Northern
Ireland. That is why as part of the economic pact:
- we contributed an additional €50m towards PEACE IV funding. The Executive will be able to use PEACE IV funding in ways consistent with the programme, including to support the United Youth Programme;
- the Government provided an extra £100m of RRI borrowing which is being used to build shared schools and shared housing; and
- we are currently looking at the potential to gift surplus properties for the provision of shared housing.
The Government's existing contribution to these important aims should be recognised and any further contribution will be expected to deliver further progress. However, the Government recognises the need to progress this type of investment more quickly. It will, therefore, fund a programme of investment projects in shared and integrated education. It will contribute up to £50m of new capital funding per year for the next ten years (starting in 2015-16) subject to individual projects being agreed between the Executive and the Government.

Page 3-4, Peace and Investment Fund
The Government also recognises the importance of social schemes but believes that these are best funded through:
- the resource budget protected by the flexibilities it has allowed
elsewhere; and
- the savings made from the introduction of a voluntary exit scheme.

Page 4, Welfare
The Government welcomes the progress made by party leaders in developing proposals for a local welfare regime which meets local requirements. It also welcomes the fact that the party leaders recognise that the Executive will be responsible for the costs associated with the welfare regime where it differs from that in GB (including AME savings foregone, changes in claimant behaviour and further administrative costs). Consistent with this understanding the savings foregone will continue to accrue until welfare changes are implemented. This means the deduction from the block grant of £114m for 2015-16 remains due. To help ease the pressure on the resource budget, the Government is willing to provide flexibility on how this deduction is taken and will allow capital funds to be used, freeing up £114m of resource funding for the other priorities. If the implementation of welfare reform is completed during 2015-16 (including the relevant secondary legislation) the £114m deduction will be reduced to reflect the proportion of the year prior to implementation of the measures. This financial package is subject to the Welfare Bill being reintroduced in January, progressing through Consideration Stage by the end of February, and full implementation of Executive led measures by 2016-17.
Natural resources: No specific mention.
International funds: No specific mention.
Business: No specific mention.
Taxation: Socio-economic reconstruction→Taxation→Power to tax
Page 4, Corporation Tax
In view of the progress made in the talks, including agreement on measures to secure the long term sustainability of the finances of the Executive, legislation will be introduced as soon as Parliament returns to enable the devolution of corporation tax in April 2017. This legislation will devolve the power for the Assembly to set a rate of corporation tax for trading profits with the responsibility for allowances and credits remaining at Westminster. The block grant will be adjusted to reflect the corporation tax revenues foregone by the UK Government due to both direct and behavioural effects but it will not take into account second round effects on other taxes.

Page 5, Corporation Tax
Progress of the legislation through Parliament this session will proceed in parallel with implementation of key measures to deliver sustainable finances, including:
a) agreement in January 2015 on a final balanced budget for 2015-16 with a clear commitment to put the Executive’s finances on a permanently sustainable footing for the future; and
b) progress on welfare reform in January with the Welfare Bill passing through Consideration Stage in the Assembly before the end of February.
The legislation to devolve corporation tax will also include a commencement clause. The powers will only be commenced from April 2017, subject to the Executive demonstrating that its finances are on a sustainable footing for the long term including successfully implementing measures in this agreement and subsequent reform measures. An implementation plan for the delivery of the commitments made must also be agreed with the Government and this will include the efficiency measures needed to put Executive finances on a sustainable basis for the future.
Banks: No specific mention.

Land, property and environment

Land reform/rights: No specific mention.
Pastoralist/nomadism rights: No specific mention.
Cultural heritage: No specific mention.
Environment: No specific mention.
Water or riparian rights or access: No specific mention.

Security sector

Security Guarantees: No specific mention.
Ceasefire: No specific mention.
Police: Page 3, Summary
...In the light of the importance placed by the Government on security, the Government expects Executive parties to protect PSNI budgets (and community policing in particular) from significant reductions.

Page 2, Funding for measures to address the past
The Government recognises the unique circumstances that are faced in Northern Ireland due to issues related to the past. The paper from the party leaders estimates the potential costs of the new bodies to be higher than Government estimates. The Government recognises the burden that this work puts on the PSNI and that the costs could be higher and so will provide further funding. Therefore the Government will contribute up to £30m per year for five years to pay for the institutions to help deal with the past.
Armed forces: No specific mention.
DDR: No specific mention.
Intelligence services: No specific mention.
Parastatal/rebel and opposition group forces: No specific mention.
Withdrawal of foreign forces: No specific mention.
Corruption: No specific mention.
Crime/organised crime: No specific mention.
Drugs: No specific mention.
Terrorism: No specific mention.

Transitional justice

Transitional justice general: Page 1, Summary
The specific measures include:
• up to £150m over 5 years to help fund the bodies to deal with the past;...

Page 2, Funding for measures to address the past
The Government recognises the unique circumstances that are faced in Northern Ireland due to issues related to the past. The paper from the party leaders estimates the potential costs of the new bodies to be higher than Government estimates. The Government recognises the burden that this work puts on the PSNI and that the costs could be higher and so will provide further funding. Therefore the Government will contribute up to £30m per year for five years to pay for the institutions to help deal with the past.
Amnesty/pardon: No specific mention.
Courts: No specific mention.
Mechanism: No specific mention.
Prisoner release: No specific mention.
Vetting: No specific mention.
Victims: No specific mention.
Missing persons: No specific mention.
Reparations: No specific mention.
Reconciliation: No specific mention.

Implementation

UN signatory: No specific mention.
Other international signatory: No specific mention.
Referendum for agreement: No specific mention.
International mission/force/similar: No specific mention.
Enforcement mechanism: No specific mention.
Related cases: No specific mention.
Source: UK Government
https://www.gov.uk/government/publications/the-stormont-house-agreement

UK Government Financial Package to Northern Ireland

Summary

The UK Government has seriously considered the proposals put forward by the party leaders.

It has tried to respond as positively as possible but this package reflects the difficult fiscal environment facing all governments and the need to be fair to all parts of the United Kingdom.

This package of support has the full endorsement of the Prime Minister.

The total value of the Government’s package is additional spending power of almost £2 billion.

This is made up of up to £650m of new and additional funding;

flexibilities that protect £900m of resource spending (normally ring fenced for capital);

and additional capital borrowing of up to £350m. These measures could also help to generate year on year savings of around £500m.

The specific measures include:

up to £150m over 5 years to help fund the bodies to deal with the past;

flexibility to use £700m of capital borrowing to fund a voluntary exit scheme over a period of 4 years with £200m in 2015-16, £200m in 2016-17, £200m in 2017-18 and £100m in 2018-19;

a contribution of up to £500m over 10 years of new capital funding to support shared and integrated education subject to individual projects being agreed between the Executive and the Government;

up to an additional £350m borrowing for infrastructure projects with a profile over four years with £100m in 2015-16, £100m in 2016-17, £100m in 2017-18 and £50m 2018-19;

allowing the proceeds of specific agreed asset sales to be retained in their entirety and exceptionally consideration of these funds being used for a combination of both capital and resource spending;

flexibility to repay both the £100m loan from the Treasury and £114m welfare deductions from asset sales and capital budgets;

and

if the implementation of welfare reform is completed during 2015-16 (including the relevant secondary legislation) the £114m deduction will be reduced to reflect the proportion of the year prior to implementation of the measures.

This represents a substantial package of support that ensures that the parties can deliver against all of their priorities.

An implementation plan for the delivery of the commitments made must be agreed with the Government and this will include the efficiency measures needed to put Executive finances on a sustainable basis for the future.

In the light of the importance placed by the Government on security, the Government expects Executive parties to protect PSNI budgets (and community policing in particular) from significant reductions.

Repayment of access to the Reserve

Following agreement of a balanced budget the Government will allow the £100m loan from the Treasury to be repaid from asset sales.

This means that the Executive will have a further £100m of resource spending available in 2015-16.

Funding for measures to address the past

The Government recognises the unique circumstances that are faced in Northern Ireland due to issues related to the past.

The paper from the party leaders estimates the potential costs of the new bodies to be higher than Government estimates.

The Government recognises the burden that this work puts on the PSNI and that the costs could be higher and so will provide further funding.

Therefore the Government will contribute up to £30m per year for five years to pay for the institutions to help deal with the past.

Restructuring - a voluntary exit scheme

The Government will allow £700m of RRI capital borrowing to be used to help deliver a voluntary exit scheme.

Whitehall departments have been expected to deliver equivalent schemes from their current expenditure.

This offer protects £700m of resource spending that would be needed to fund the scheme.

This would be £200m in 2015-16, £200m in 2016-17, £200m in 2017-18 and £100m in 2018-19.

This flexibility is only available to fund a voluntary exit scheme.

The Government believes that this remains an effective way to deliver the proposals.

Each £100m of borrowing will cost between £3-4m a year in loan repayments, but will yield annual savings in excess of £50m. These are savings that could be used to deliver other priorities including investment in social outcomes projects.

The Government has reflected on concerns that this approach would limit the access to borrowing for important capital projects.

It therefore proposes that in addition to the borrowing for the voluntary exit scheme, from the existing RRI allocation, further capital borrowing will be made available.

This will provide up to an additional £350m of borrowing to support important capital investment in projects to support economic growth.

The spending profile is across 4 years with £100m in 2015-16, £100m in 2016-17, £100m in 2017-18 and £50m in 2018-19.

Peace and Investment Fund The Government recognises the need for investment in the future of Northern Ireland.

That is why as part of the economic pact:

we contributed an additional €50m towards PEACE IV funding.

The Executive will be able to use PEACE IV funding in ways consistent with the programme, including to support the United Youth Programme;

the Government provided an extra £100m of RRI borrowing which is being used to build shared schools and shared housing;

and

we are currently looking at the potential to gift surplus properties for the provision of shared housing.

The Government's existing contribution to these important aims should be recognised and any further contribution will be expected to deliver further progress.

However, the Government recognises the need to progress this type of investment more quickly.

It will, therefore, fund a programme of investment projects in shared and integrated education.

It will contribute up to £50m of new capital funding per year for the next ten years (starting in 2015-16) subject to individual projects being agreed between the Executive and the Government.

The Government also recognises the importance of social schemes but believes that these are best funded through:

the resource budget protected by the flexibilities it has allowed elsewhere;

and

the savings made from the introduction of a voluntary exit scheme.

Welfare

The Government welcomes the progress made by party leaders in developing proposals for a local welfare regime which meets local requirements.

It also welcomes the fact that the party leaders recognise that the Executive will be responsible for the costs associated with the welfare regime where it differs from that in GB (including AME savings foregone, changes in claimant behaviour and further administrative costs).

Consistent with this understanding the savings foregone will continue to accrue until welfare changes are implemented.

This means the deduction from the block grant of £114m for 2015-16 remains due.

To help ease the pressure on the resource budget, the Government is willing to provide flexibility on how this deduction is taken and will allow capital funds to be used, freeing up £114m of resource funding for the other priorities.

If the implementation of welfare reform is completed during 2015-16 (including the relevant secondary legislation) the £114m deduction will be reduced to reflect the proportion of the year prior to implementation of the measures.

This financial package is subject to the Welfare Bill being reintroduced in January, progressing through Consideration Stage by the end of February, and full implementation of Executive led measures by 2016-17.

Corporation Tax

In view of the progress made in the talks, including agreement on measures to secure the long term sustainability of the finances of the Executive, legislation will be introduced as soon as Parliament returns to enable the devolution of corporation tax in April 2017.

This legislation will devolve the power for the Assembly to set a rate of corporation tax for trading profits with the responsibility for allowances and credits remaining at Westminster.

The block grant will be adjusted to reflect the corporation tax revenues foregone by the UK Government due to both direct and behavioural effects but it will not take into account second round effects on other taxes.

Progress of the legislation through Parliament this session will proceed in parallel with implementation of key measures to deliver sustainable finances, including:

a) agreement in January 2015 on a final balanced budget for 2015-16 with a clear commitment to put the Executive’s finances on a permanently sustainable footing for the future;

and

b) progress on welfare reform in January with the Welfare Bill passing through Consideration Stage in the Assembly before the end of February.

The legislation to devolve corporation tax will also include a commencement clause.

The powers will only be commenced from April 2017, subject to the Executive demonstrating that its finances are on a sustainable footing for the long term including successfully implementing measures in this agreement and subsequent reform measures.

An implementation plan for the delivery of the commitments made must also be agreed with the Government and this will include the efficiency measures needed to put Executive finances on a sustainable basis for the future.