Economic prosperity and stability in Northern Ireland

Today, the Chancellor of the Exchequer, Rt Hon Gordon Brown MP, announced an historic future funding package for an incoming Northern Ireland Executive. Following the meeting of leading members of the Northern Ireland parties, the Chancellor announced an additional £1 billion extra spending for the next four years to meet the economic and political priorities of an incoming Executive, building on the £50 billion commitment already pledged last November.

Speaking after the meeting, Gordon Brown said:

"This is an historic opportunity and I believe the Northern Ireland political parties are all serious about what can be done to achieve that. Today by making possible the resumption of the Executive, through providing the resources that they need, we can move this process forward."

The Secretary of State for Northern Ireland, Peter Hain, said:

"Alongside the excellent progress being made by the Northern Ireland parties to secure continued peace and political stability, today's announcement secures a stronger brighter economic future for the people of Northern Ireland."

The additional £1 billion, in response to specific representations from the Northern Ireland parties, represents a wider package of measures to enhance long-term productivity and employment prospects. This package will be made available on the restoration of devolution and includes:

an unprecedented package of integrated investment in infrastructure, including a major new roads programme, based on further funding of £200m from the sale of assets and £400 million made available by the Irish Government over the next four years. This is additional to the £18bn allocated to the revised Investment Strategy for Northern Ireland;
the provision of additional funding of £400m including an upfront £100m in 2007-08 from the Treasury's reserve to enable an incoming administration to delay the introduction of water charges without affecting existing spending plans in Northern Ireland and introduce an innovation fund;
confirmation of an innovation fund of £500m including an additional £119m, over the next four years focusing particularly on levering in private sector investment and promoting collaborative research. This includes matched funding of £36m from the Irish Government targeted specifically on collaborative research and development;
following representations from all the political parties on differential tax rates, the announcement of an review - led by Sir David Varney - to report on how current and future tax policy, and including the tax changes announced in the Budget, can support sustainable growth of businesses and long-term investment in Northern Ireland. Sir David will report in the autumn;
a new Northern Ireland corporate tax office to promote the competitive tax position which Northern Ireland enjoys, working closely with Invest Northern Ireland to promote indigenous and inward investment;
confirmation of £200m borrowing from 2007-08 under the Reinvestment and Reform Initiative and breaking the link with the requirement to close the gap with GB council tax rates. This is in addition to the cap on rates and enhanced relief for pensioners already announced by the Secretary of State;
a local employment partnership - that will help create 5,000 jobs for the unemployed in Northern Ireland - between five leading employers in the retail sector - Asda, B&Q, Marks & Spencer, Sainsburys, and Tesco - along with the British Retail Consortium and the Employment Service in Northern Ireland to support long-term benefit claimants into work, building on the successful approaches these retailers have already established together with a commitment to discuss with the construction industry the development of a similar partnership; and
agreement to further discussions between an incoming Executive and officials of Her Majesty's Revenue and Customs (HMRC) with regard to excise duties and measures to tackle fraud in Northern Ireland.
to enhance Northern Ireland's competitive positioning in the global economy and, in particular, its ability to attract foreign direct investment, the British Government, with the full support of the United States, will host a ground-breaking conference in Northern Ireland for prospective investors.

Notes for editors

1. This meeting follows the agreement reached at St Andrews and the subsequent meeting in November 2006 where the Chancellor offered a £50 billion long term funding package for an incoming Northern Ireland Executive. See press notice 82/06.

2. The Government agreed today to offer a further economic package focused on productivity and employment prospects in Northern Ireland and designed to support the vision that the Government shares with the parties for Northern Ireland to create a world class, high skilled, modern and dynamic economy.

3. The Treasury will make available a further £200m from the sale of assets to fund capital expenditure. The Irish Government has made available further funding of £400million (€580million). This is in addition to the substantially increased allocation for the revised Investment Strategy for Northern Ireland provided by the Chancellor. This will fund an unprecedented package of infrastructure investment, including a major new roads programme to provide dual carriageway standard on routes within Northern Ireland serving the North West Gateway of Letterkenny/Derry and on the eastern seaboard corridor from Belfast to Larne.

4. The Irish Government has also confirmed its willingness to agree with the new Executive substantial investment in North/South co-operation through opening up on an all-island basis of development funding in a range of areas as set out in the National Development Plan 2007-2013. This will be additional to existing planned projects and the contribution to the enhanced roads programme. These contributions will be made in the context of agreement with the restored Northern Ireland Executive.

5. Sir David Varney has most recently advised the Chancellor on the Transformational Government Strategy which was published alongside the Pre Budget Report 2006. Prior to that, Sir David was Chairman of HMRC from September 2004. Sir David has been Chairman of MM02, and was previously Chief Executive Officer of BG Group (formerly British Gas) from 1996 to 2000.

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