Abstract
This chapter examines the financial arrangements and public expenditure in Northern Ireland under direct rule. The key aspects of the public expenditure process under direct rule were not subject to major change. Some of the distinctive features of the financial processes had been retained including the Northern Ireland Consolidated Fund, the clearly identifiable income and expenditure, the Northern Ireland block grant from the Treasury and the Barnett formula. The most important change which came about with direct rule was the abolition of almost all the special arrangements for giving financial assistance and their replacement with a general grant-in-aid from the Secretary of State to the Northern Ireland Consolidated Fund. The direct rule administrations also increased public expenditure and the size of the Treasury subvention which led to higher outlay per capita expenditure than England, Scotland and Wales.
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