NI Executive facing deep cuts of £1.5bn over next four years

Minister for Finance Simon Hamilton presents draft budget ‘rooted in tough choices’

The North's finance Minister Simon Hamilton in presenting a draft budget in the Assembly today has warned of swingeing cuts to the Northern Executive of some £1.5 billion (€1.9 billion) up to 2019.

The DUP Minister delivered a draft budget “rooted in tough choices” that will mean reductions in allocations to the executive’s departments of more than £200 million for the year 2015-2016. Planned current expenditure for that year is down from £10.232 billion to £10.019 billion.

However, as Mr Hamilton told Assembly members, the big spending cuts will be in the years from 2016 to 2019 when allocations from the British Treasury to Stormont will be down by 13 per cent cumulatively, in real terms amounting to about £1.3 billion. This is on top of next year's cutback of £213 million.

Illustrating the extent of the cuts Mr Hamilton said that already since the budget of 2010-11 “the Executive’s spending power has been reduced by around £1.5 billion”.

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“So, in this year and beyond . . . It is a situation which demands that tough, sometimes even undesirable, choices be made,” said Mr Hamilton.

Mr Hamilton was able to present his draft budget, which he hopes to formalise in January, by virtue of an agreement between the DUP and Sinn Féin last week. Had the parties failed to reach a compromise a crucial loan of £100 million from the British government to the Executive would not have come through, causing even further cutbacks.

The unresolved issue of whether the Executive will accept British government welfare reform is also causing financial pressures for Stormont. Mr Hamilton has set aside £70 million in the draft budget “to mitigate the impact of welfare reform changes on the most vulnerable”.

Sinn Féin, which has an effective veto on the matter, continues to oppose welfare change. If reform is not adopted then the Executive will face a penalty of £114 million in 2015-2016 on top of the £87 million penalty it incurred this year.

A majority of the North’s departments are taking cuts in allocation in 2015-16 apart from the highest-spending department, Health, whose budget increases by £140 million from £4.543 billion to £4.693 billion; and Enterprise, Trade and Investment – the allocation here rises by £10 million from £184 million to £194 million.

On a more positive note Mr Hamilton said there was "irrefutable" evidence that the Northern economy had exited the "worst economic crisis in living memory". Unemployment was down to 6.1 per cent compared to 11.5 per cent in the Republic and a European Union average of 10.2 per cent. He referred to growth in areas such as jobs investment, tourism and agri-food.

Gerry Moriarty

Gerry Moriarty

Gerry Moriarty is the former Northern editor of The Irish Times