Devolution dispute process invoked over Northern Ireland funding deal

The formal dispute resolution process for devolved administration has been invoked by the Scottish and Welsh Governments, which are claiming the right to additional funding as a result of the Prime Minister’s deal with the Democratic Unionist Party in Northern Ireland.

Both Governments claim that any additional funding for Northern Ireland must respect the established funding principles and rules applied through the operation of the Barnett formula, under which the additional £1bn promised to Northern Ireland would result in Wales receiving an additional £1.67bn and Scotland an additional £2.9bn.

Derek Mackay, the Scottish Government’s Finance Secretary, and his Welsh counterpart Professor Mark Drakeford have written to Liz Truss, Chief Secretary to the Treasury, to invoke the formal dispute resolution process through the Joint Ministerial Committee.

It is the first time the procedure has been deployed since the three devolved administrations successfully claimed extra spending money on the basis of funds set aside for regeneration and transport within the budget for the London Olympics in 2012.

UK ministers claim that the Northern Ireland agreement should be regarded in the same way as the funding of city deals, which do not come within the Barnett formula, but Mr Mackay said these were "not in any way comparable".

"City deal funding is conditional on match funding from the devolved administrations’ own budgets and also requires contributions from local authorities and other regional partners", he argued. "In addition, the UK Government has promised city deals for Northern Ireland on top of this £1bn of additional expenditure.

Professor Drakeford added: “The arrangements offered to Northern Ireland have direct read across to areas of devolved responsibility. For this reason, the benefits of the additional spending should be mirrored across all parts of the UK."

Under the Memorandum of Understanding between the UK Government and the devolved administrations, all efforts should be made to resolve differences informally and at working level if possible. Where this fails, more senior officials and then ministers should be involved. Where all this fails, the formal procedure involves the secretariat to the Joint Ministerial Committee convening a meeting of the respective officials to seek agreement as to the relevant facts, and then facilitate discussion of shared interests, options for resolving the disagreement and criteria for an agreed outcome. A proposal will then be put to ministers for agreement. Independent analysis may be commissioned. Further rounds of discussions at ministerial level may follow, but there is also recognition that no agreement may be reached.