Public services in Northern Ireland are set to receive a £1.6 billion boost, the Chancellor has said.

However while Rishi Sunak hailed the largest block grants, in real terms, for the regions since the devolution settlements of 1998, local politicians described a “tough budget for people struggling to make ends”.

Stormont Finance Minister Conor Murphy also disputed the promise of an additional £1.6bn per year for Executive departments, and described “significant challenges for public services”.

“When compared to the Executive’s 2021/22 Budget there will be an additional £450m, £670m and £866m for day-to-day spending against growing demand for public services,” he said.

“This represents a marginal 0.9% real term increase to the Executive’s Budget next year, turning to zero real terms change by 2024-25.”

Mr Murphy described years of austerity and the coronavirus pandemic as having placed “enormous strain on public services”.

“Our health service in particular is under immense pressure with waiting lists at an unprecedented level.

“Workers face an increase in National Insurance and families are dealing with a cost of living crisis as a result of rising food and energy costs,” he said.

“This Spending Review was the opportunity to deliver a budget which would have enabled the Executive to rebuild public services and spur economic recovery.

“However it provides a marginal real terms increase in funding next year which will be far outweighed by increased demands on public services, particularly in light of the ongoing pandemic.”

In his Budget speech to the Commons on Wednesday, Mr Sunak also announced a 50% cut to air passenger duties on flights between the UK regions.

The Government is to provide £15 billion per year to the Northern Ireland Executive.

This has been described as a 2.2% rise in the Stormont budget.

Northern Ireland is also set to benefit from UK-wide support for people and businesses, green jobs and investment while targeted funding will support local projects.

These projects include an electric vehicle charging network and the redevelopment of a derelict Ministry of Defence site in Londonderry into an urban community farm.

There will also be £1 billion for farmers and land managers and £9.3 million to support fisheries, the establishment of a new trade and investment hub in Belfast and the continuation of the £400 million New Deal for Northern Ireland investing in infrastructure and boosting economic growth.

Mr Sunak said the Budget aims to focus on health, public services, jobs and tackling climate change.

He said: “The UK Government is committed to levelling up opportunity and ensuring Northern Ireland feels the strength of our Union with a record £15 billion per year for the Executive – we are better together as one United Kingdom.”

Northern Ireland Secretary Brandon Lewis described the announcement as significant.

He said: “From £70 million to champion thousands of small and medium-sized enterprises to £49 million coming from the Levelling Up and Community Ownership funds, the opportunities for Northern Ireland are immense.”

Mr Murphy welcomed the reduction in APD but said it was “disappointing” it had not been abolished.

He said his department will now work to prepare the Executive’s budget to cover from 2022-2025.

“A multi-year Budget at least enables the Executive to better plan and prioritise its finances,” he said.

“The task now for us as an Executive is to make the best possible use of the limited resources available and work together to produce a Budget that brings down waiting lists on a sustainable basis.”

SDLP leader Colum Eastwood claimed the Budget “ignored the cost of living crisis”.

He said: “In the past few months alone we have seen spiralling fuel costs, Universal Credit has been cut by over £1,000 a year, inflation is on the rise and national insurance contributions are set to increase.

“The Chancellor had a choice today – he could have protected the most vulnerable in society from the cost of living crisis – but in typical Tory fashion he has chosen not to, instead presenting a Budget that does more to help those who are already thriving.

“Buried within today’s Budget is a three-and-a-half billion tax break for banks, while ordinary people are left to suffer.”

Alliance MP Stephen Farry criticised the Budget for “failing to produce a green deal”.

He said: “Despite the spin by the Government, this is a tough Budget for people struggling to make ends meet while facing a spiralling cost of living.

“It also represents a serious missed opportunity for the UK to embark on a Green New Deal, combining action to address the climate emergency with a new approach to economic opportunity and social protection.

“The Government is not providing sufficient investment in a green transformation, skills and job creation. With the UK set to host Cop26 next week, the Chancellor couldn’t even make one reference to the climate crisis.”

Ann McGregor, chief executive of NI Chamber, said while the Budget contains some measures which will help economic recovery, an expected inflation rise of 4% means trading conditions are going to “remain very challenging”.

She added: “In principle, we welcome additional funding for the region via the block grant and will await with interest, to see how businesses here will benefit from it. It is important that commitments to rates relief for hospitality and leisure businesses are extended to businesses in Northern Ireland.”

Hospitality Ulster chief Colin Neill welcomed the freeze on alcohol duties, and a “recognition” of difficulties faced by the sector, but said rising food and energy costs need to be addressed urgently.

He added he hopes the Stormont Executive will “follow Mr Sunak’s lead on business rates relief”.

Matthew Hall, chief executive of Belfast City Airport, said it has campaigned for the abolition of APD.

“A 50% reduction in APD is a half-way house in terms of solving a problem which has placed the aviation sector in Northern Ireland at a competitive disadvantage with other regions in attracting new airlines and routes,” he said.

“Today’s announcement by the Chancellor will not take effect until April 2023 and does little in the short term to alleviate a sector still decimated by Covid.”