Executive gets extra £30m but future clawback warned

NORTHERN IRELAND:TAX HIKES, benefit boosts and a public sector pay freeze lie in store for Northern Ireland but there will be no immediate major financial cuts following the latest Pre-Budget Report in Britain.

There had been concerns that Alistair Darling might move to reduce the financial package the North receives from the treasury under devolution. But the Northern Ireland Executive emerged with an additional £28 million (€30 million) to spend as a result of increases announced for departments yesterday.

Business advisers PricewaterhouseCoopers (PwC) have warned that this might be a delaying tactic from Mr Darling as the North could end up paying back over £70 million a year for the next two years as part of a drive to make the public sector more efficient.

PwC managing partner Hugh Crossey said any clawback needed to be seen in the context of local budget cuts already proposed in the North which could top £370 million.

Minister for Finance Sammy Wilson said it was a welcome development that there would not be a “significant reduction” in the block grant. Mr Wilson said there would be “understandable concern at the implications for local public services” about Mr Darling’s target for Whitehall departments to deliver £12 billion in efficiencies by 2013-14.

Mr Wilson said: “There remains a significant amount of uncertainty, particularly in terms of the extent to which efficiency savings will be directed back into services . . . A key issue for the Executive is whether we would wish to match the Whitehall targets.”

Mr Wilson said most measures outlined in the Pre-Budget Report would have “little impact on the people of Northern Ireland”. But there has already been widespread disgust at Mr Darling’s decision to impose what has been described as an extra jobs tax. National Insurance contributions will rise by a further 0.5 per cent from April 2011, which will hit most people’s pockets in Northern Ireland.

Consumers will also feel the impact of the return of the VAT rate to 17.5 per cent from January 2010. Glyn Roberts, chief executive of the Northern Ireland Independent Retail Trade Association, said retailers were disappointed.