THE DUP and Sinn Féin have signed up to a draft budget that will cut current spending by 8 per cent and capital spending by 40 per cent in Northern Ireland over the next four years to meet £4 billion (€4.7 billion) in savings demanded by British exchequer chancellor George Osborne.
DUP Minister for Finance Sammy Wilson unveiled his budget in the Northern Assembly yesterday after the DUP and Sinn Féin late on Tuesday hammered out an agreement for budgets for the next four years to 2015. The Ulster Unionist Party, the SDLP and Alliance were also involved in the negotiations.
The proposals include a pay freeze for thousands of civil servants, the disposal of Northern Executive assets worth hundreds of millions of pounds, inflation-linked increases in domestic and business rates and a 15p plastic bag levy. There will be no water charges over the next four years.
Mr Wilson said the five-party Northern Executive had passed a “litmus test” in agreeing a four-year draft budget, especially when considered against concerns that agreement would be impossible. “This is an important day for the new devolved arrangements. I believe it is the day that the Executive came of age,” said Mr Wilson.
The Executive is charged with making savings of £4 billion from current and capital spending of some £45 billion over the next four years. It does not have the power to raise taxes as this is a matter for Westminster. Moreover, social welfare payments are also a matter for Westminster rather than Stormont.
Mr Wilson is seeking to achieve the savings through new sources of revenue, reducing costs and achieving greater efficiencies and through “hard-nosed prioritisation” of how departmental money is spent.
Taking predicted 2 per cent annual inflation into account all of the North’s 12 departments suffer cuts although there is an attempt to ringfence spending on health in the budget of the Department of Health, Social Services and Public Safety which annually is well over £4.5 billion.
Mr Wilson did not spell out what capital projects will be hit but it seems clear that a number of high-cost plans will have to be abandoned or postponed. For instance capital spending in education is £169 million this year, but that will reduce to £127 million next year, to £100 million the year after, £101 million in year 2013-14, and £139.4 million in year 2014-2015.
Mr Wilson proposed a pay freeze over the next two years for some 12,000 Northern Ireland civil servants earning more than £21,000 a year and a moratorium on recruitment except in exceptional circumstances.
Some 14,000 civil servants earning under £21,000 will receive a pay rise of £250. While public sector pay is a matter for negotiation with London it is expected that a similar pay freeze will apply to the 200,000 Northern public sector workers earning over £21,000.
A plastic bag levy of 15p is expected to raise £16 million over four years. The Executive will also assess the value of the North’s quangos, with a view to scrapping some and merging others.
Mr Wilson believes that disposing of assets, mainly land, owned by the Northern Executive could yield £540 million. It is hoped that an additional £300 million will be raised through means such as increasing rates by the inflation rate – currently about 2 per cent per annum – through a minimum £35 million contribution from Belfast Harbour Commissioners, and through reducing payments to housing bodies.
The Northern Executive also believes that it could be possible to raise £125 million from the profit-making Belfast Harbour Commissioners in exchange for new legislation that would liberalise its commercial operations at the port. A £20 million “hardship” or social protection fund is to be created to help on a case-by-case basis those hit hardest by the British government’s social welfare cuts.