THE main reason Stormont keeps running out of money is its policy of pay parity – matching England’s public sector pay rises.

This is “the dominant source of structural pressure” on the budget, according to a March report from the independent Fiscal Council, which advises the Executive on its finances.

The reasons Stormont cannot afford its policy are more complicated, revealing rights and wrongs in Belfast and London.

When public spending rises in England, the devolved regions get additional payments to their block grants, based on their relative populations.

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However, Northern Ireland has 44% more public sector workers per head of population than England, so these additional payments fall well short.

The inflation of the past decade has turned this gradual squeeze into a crushing blow.

Two years ago, a new ‘needs-based’ formula was introduced that tops up all additional payments by 24%.

As far as the Treasury is concerned, it has now done all it reasonably can and Stormont should close the remainder of the gap itself.

That could be achieved by breaking parity, reducing staff, or by raising revenue or making cuts elsewhere.

The Treasury obviously sees over-staffing as the fundamental problem.

In........

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