Rishi Sunak and Leo Varadkar make flying visits to Northern Ireland

Image source, Kelvin Boyes/Press Eye

Image caption, Prime Minister Rishi Sunak visited Stormont for the first time on Monday

By Jayne McCormack

BBC News NI political correspondent

Prime Minister Rishi Sunak and Taoiseach (Irish PM) Leo Varadkar have visited Stormont to mark the return of power sharing in Northern Ireland.

They met for what the taoiseach called “a very good meeting”.

They also met political leaders separately, including First Minister Michelle O’Neill and Deputy First Minister Emma Little-Pengelly.

Mr Sunak said the new deal would protect Northern Ireland’s place in the union.

He said the return of devolved government was a cause for optimism, adding that government had “worked very hard and succeeded in protecting Northern Ireland’s place in the union”.

Mr Varadkar would not be drawn on the question of a united Ireland, instead saying that the assembly’s return showed the Good Friday Agreement was working again.

He said the new ministers were “keen to get into their briefs” and the Irish government was “here to help”.

Speaking ahead of the first meeting of the Northern Ireland Executive – the ministers which direct policy and make decisions – Ms O’Neill said “today is a good day”.

Image source, PA Media

Image caption, First Minister Michelle O’Neill and Deputy First Minister Emma Little-Pengelly led the first meeting of the Northern Ireland Executive on Monday afternoon

She said the parties in the executive – her party Sinn Féin; the Democratic Unionist Party (DUP); the Ulster Unionist Party (UUP); and Alliance – had “committed to working together”.

Ms Little-Pengelly echoed the first minister comments saying they were “very conscious of the big issues to tackle”.

First ministers call for change to NI funding

Both said that in the meeting this morning with the prime minister the main topic of conversation had been finance, with Northern Ireland ministers pressing Mr Sunak to change how Northern Ireland is funded.

Mr O’Neill said incoming ministers had “in-trays as long as your arm” but proper financial arrangements had to be in place in order to deal with these.

Meanwhile, Ms Little-Pengelly said; “We want to make sure that this executive has the right tools and sufficient resources to do what it needs to do

“We are up for that challenge and we are up for a very constructive working arrangement to try to tackle those issue together.”

The executive has called for talks with the government on long-term funding stability to deliver public services, with Ms O’Neill saying NI’s funding model was the executive’s priority.

Image source, Sinn Féin

Image caption, Sinn Féin’s president Mary Lou McDonald (left, middle) was among politicians who greeted Mr Sunak to Stormont

The government has already pledged to provide a financial package worth £3.3bn to any newly-formed executive at Stormont.

On Sunday, Mr Sunak described the package as “a generous and fair settlement for Northern Ireland”.

However, in the letter to the prime minister, the executive said the additional funding “will only serve to provide a short-term solution to the pressing issues we now face”.

Ms O’Neill said how Northern Ireland is funded needs to change, adding she would be “strongly pressing that point” with Mr Sunak.

Image source, PAcemaker

Image caption, Taoiseach Leo Varadkar met Deputy First Minister Emma Little-Pengelly and First Minister Michelle O’Neill at Stormont

Deputy First Minister Emma Little-Pengelly, who jointly leads the executive with the first minister despite their different titles, added that they will be seeking to ensure the government “provides sufficient funding in a package to fulfil its promises on public sector pay”.

The letter calls for a new funding model that offers “long-term sustainability”, adding that will only happen “through joint working and delivery from both your government and the executive”.

Image source, Reuters

Image caption, Assembly Speaker Edwin Poots (middle) greeted PM Rishi Sunak and NI Secretary Chris Heaton-Harris at Parliament Buildings in Belfast

Sir Jeffrey Donaldson, the DUP leader who does not sit as an MLA because he holds an MP seat at Westminster, said on Monday morning that he would be speaking to the prime minister about Northern Ireland’s public finances.

He said he would be “unapologetic” in those discussions.

“Northern Ireland is funded below the level of need,” Sir Jeffrey said.

“We need the government to go a bit further so our finances are in a sound position.”

However, speaking on BBC Breakfast, Secretary of State for Northern Ireland Chris Heaton-Harris said the funding package was “fair and generous”.

“The Northern Ireland Fiscal Council said in a report in May last year that it was funded correctly and this £3.3bn comes on top of that,” he said.

In this letter, the new Executive is effectively saying the financial package announced before Christmas is almost guaranteed to lead to another budget crisis at Stormont unless it is revised.

Ministers therefore want the reopening of negotiations on significant elements, most notably the “fiscal floor”.

It is based on the devolved funding model in Wales, where it was recognised that demographic differences make it more expensive to deliver services compared to England.

The government agreed that Wales should be funded at a 115% of England’s level. In other words for every £100 per head spent on public services in England, there should be no less than £115 per head for Wales.

The government has also accepted a similar model for Northern Ireland with per head funding to be set at 124% of England’s level.

Stormont’s ministers say this is too low and has not been subject to robust independent assessment or analysis.

They believe the starting point should be 127%, with a case for it to go higher.

The difference may sounds small but over time it would represent billions of pounds of additional funding.

Image source, Democratic Unionist Party

Image caption, Posting on X, the DUP said it is “always good” to outline its priorities to the PM

On BBC Radio Ulster, Mr Heaton Harris questioned whether civil servants might be wrong about the figure of 127%, adding: “They have been wrong in the past.”

The secretary of state continued: “Anything that we do when it comes to public sector funding has to be based on facts and numbers rather than theory, so I am sure there will be lots of conversations based on this, but I would like to think they would be based on factual figures.

“There is a big chunk of money for public sector pay but that relies on negotiations conducted by local ministers, there’s a big chunk of money that’s new and we would like to see that spent on transformation of public services, and there’s a big chunk of money that comes from money that previously been promised by the UK govt and not spent goes into that transformation pot.”

Image source, Oliver McVeigh

Image caption, (L-R) NI Secretary Chris Heaton-Harris, First Minister Michelle O’Neill, Deputy First Minister Emma Little-Pengelly and UK Prime Minister Rishi Sunak, pictured at Parliament Buildings in Belfast

How did we get here?

The return of power-sharing came after months of negotiations involving the government and the DUP, Northern Ireland’s largest unionist party.

It withdrew from power-sharing in February 2022 in protest at post-Brexit trade arrangements for Northern Ireland, agreed between the UK and EU.

Last week, DUP leader Sir Jeffrey Donaldson announced his party had a reached a deal with Number 10 that means no “routine” checks on goods crossing from Great Britain to Northern Ireland.

He said on this basis, and with legislation passed at Westminster to implement more changes, his party would return to government.

That decision culminated in the restoration of the power-sharing institutions on Saturday, two years to the day since the DUP walked out of the executive.