The Democratic Unionist Party (DUP) is looking for around £2bn in investment in Northern Ireland’s health service and infrastructure in return for supporting the Conservative party’s government, according to reports.
The sum, which would represent an extra £1,100 per person in Northern Ireland, would be pledged in exchange for the DUP supporting the Tories in a “confidence and supply” deal, in which they promise to back the government in voting through the Queen’s Speech and Budgets, the BBC was told.
The government ploughed on today with the Queen's Speech, the set piece in which it unveils its agenda for the parliament, without a final agreement on a deal.
The Tories were shorn of their parliamentary majority a fortnight ago after the shock result in the snap General Election called by Prime Minister Theresa May.
The DUP, led by Arlene Foster, has also pushed for greater economic control, including over corporation tax and air passenger duty, in an effort to boost growth in Northern Ireland.
The extra spending would come on top of already large government support relative to the rest of the country.
Northern Ireland is already the biggest regional recipient of money from central government: it ran a fiscal deficit of £5,440 in 2016, in comparison to a surplus in London, according to the Office for National Statistics. Meanwhile it receives the largest expenditure per person of any region in Britain, at £14,020.
The demands from the DUP, and May’s reliance on them to pass any laws in government, has led many economists to predict an easing of austerity, the programme of spending cuts implemented for the last seven years under two Conservative chancellors.
Funding for the devolved administration run in Belfast has been decided up until now by the Barnett formula, which would conventionally mean the government should increase spending on all other parts of the country by a comparable amount if it boosts NI spending. However, it carries no legal obligation.
An extra £2bn in spending would represent a large increase in spending for the 1.85m people living in Northern Ireland, although it would be a relatively small amount in comparison to the budget deficit for the UK, which is predicted to rise to £58.3bn in this financial year by the Office for Budget Responsibility, the government’s fiscal watchdog.