On November 26, 2025, Chancellor Rachel Reeves delivered a much-anticipated Autumn Budget that sent ripples through the devolved governments of the United Kingdom, with Northern Ireland’s political leaders voicing pointed concerns about the implications for public services and working families. The Budget, which included an additional £370 million for the Northern Ireland Executive, has sparked a heated debate over how far the new funding will go—and whether more tough choices, including possible revenue-raising measures, lie ahead.
Finance Minister John O’Dowd didn’t mince words as he outlined the situation facing Stormont. Despite the headline figure of £370 million, O’Dowd explained that only £18.8 million of that would be available in the current financial year, leaving a projected funding gap of around £400 million. "While additional funding for public services is welcome, the reality is stark," O’Dowd said, according to Belfast Live. "This falls far short of what is needed to support the delivery of frontline public services."
The £370 million itself is divided into £240 million for the day-to-day running of Stormont’s departments, to be spread over three years, and £130 million in capital funding, allocated over four years. Much of the resource funding is expected to be used to replicate the uplift in benefit spending announced in the Budget, reflecting Northern Ireland’s practice of maintaining parity with England and Wales on social security changes. As The Irish News reported, this parity system means that changes to benefits in England and Wales are usually mirrored in Northern Ireland, a point emphasized by Communities Minister Gordon Lyons.
Lyons, however, was sharply critical of the Budget’s impact on ordinary people. Speaking on the BBC’s Good Morning Ulster programme, he declared, "Quite frankly, we have a Budget yesterday that does sod all for workers and I am not prepared to put more burden on those that are actually trying to do their best and grow the economy." He added, "(Working people) are already getting hammered at every opportunity, they feel that they are doing the right thing, and revenue raising will simply hit them again and again."
Lyons cautioned against the Executive considering new revenue-raising measures, such as local taxes or charges, arguing that these would disproportionately affect working families who are already struggling. "It will fall on the backs of the same people, those who are out working every single day, people who are getting in their cars and vans on their way to work," he said. "They are already getting hammered at every opportunity, they feel that they are doing the right thing, and revenue raising will simply hit them again and again."
Yet, not all officials see it that way. Northern Ireland Secretary Hilary Benn responded that the Executive does, in fact, have the means to raise more money if it chooses. "All governments have got to balance their budgets, it’s no different in Northern Ireland from the UK or any other government around the world," Benn told reporters. "If you want more funds, the means are in your own hands, but you have to take the decision to raise more funds. That is what being in government is about." Benn even suggested that Northern Ireland could introduce water charges, as exist elsewhere in the UK—a move that has long been politically sensitive in the region.
The Budget’s most significant social policy announcement was the scrapping of the two-child benefit cap, a move welcomed by Lyons. "The funding will come from the UK Government largely for us to be able to do this," he noted, emphasizing that the responsibility lies with his department and the Work and Pensions Secretary to maintain benefit parity with the rest of the UK. "Ultimately, any decisions that I make that require legislative change will require Executive approval but I think there is cross-party support on this one." The funding for this increased welfare spending will be provided outside the block grant allocation.
Despite the extra money and the end of the two-child benefit cap, Lyons argued that the positives were "outweighed" by other measures in the Budget. Among those, the extension of the freeze on income tax thresholds until 2030-31 stands out. According to Treasury documents cited by The Irish News, this measure is expected to raise £8 billion by 2030-31, as wage inflation pushes more people into higher tax brackets. Specifically, 780,000 more people across the UK will pay the basic rate (20%) of income tax, another 780,000 will move into the higher rate (40%), and 4,000 will end up paying the additional rate of 45%. In Northern Ireland, Queen’s University economist Richard Ramsey estimated that one-in-seven taxpayers currently pay the 40% or 45% rates, but this could rise to one-in-five by 2030.
There are some bright spots for workers. The National Living Wage will rise from £12.21 to £12.71 per hour for those over 21 starting in April 2026, with an 8.5% increase to £10.85 per hour for 18-20 year-olds. The Treasury estimates that 170,000 workers in Northern Ireland will see their wages rise as a result. Additionally, pension contributions under salary sacrifice schemes will now qualify for national insurance for both employers and employees, another move aimed at boosting government revenue.
Business support, however, was a sticking point for O’Dowd. He expressed disappointment that the Budget did not offer more help to local businesses, calling it "a missed opportunity." Still, the Chancellor did confirm £17 million "to support businesses and strengthen the UK internal market and backing advanced manufacturing through the Northern Ireland enhanced investment zone." There’s also a new £783 million local growth programme for Scotland, Wales, and Northern Ireland, distinct from the UK Shared Prosperity Fund, which aims to spur regional economic development.
The Budget rollout was not without controversy. The Office for Budget Responsibility (OBR) accidentally published its assessment hours before Chancellor Reeves’ official announcement, adding to the sense of drama that surrounded the day. By the time Reeves addressed the House of Commons, many details had already leaked to the media, leaving some observers unimpressed by the spectacle.
As the dust settles, the fundamental question remains: will the extra £370 million and policy changes be enough to shore up Northern Ireland’s public services and protect its most vulnerable citizens? With a £400 million shortfall still looming and ministers at odds over whether to raise more money locally, the coming months are likely to see more tough debates—and no easy answers.
