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03/05/2023
NI Depts May Need To Find £800m In Cuts And Revenue
The Northern Ireland Civil Service Departments may need to find £800 million in cuts and additional revenue to avoid another overspend, the Northern Ireland Fiscal Council (NIFC) has warned.
An additional £297 million was claimed from the Treasury Reserve in 2022 to 'balance the books' in Northern Ireland following an overspend to meet to day-to-day costs of public services.
Under normal circumstance, the Treasury would have required this additional claim to be repaid in full this year, but it has been deferred until 2024-25.
This deferral has resulted in potential departmental funding cuts being limited to 3.2%, down from the predicted 5.5%. However, it has also resulted in NI foregoing any boost to the Block Grant, as any spending increases will be put towards repaying the Reserve claim.
Commenting on the issue, Sir Robert Chote, chair of the Council, said: "For many years NI Departments benefited from funding-per-head that was not only well above spending in England but also above estimates of relative need. The funding premium has fallen sharply to broadly in line with relative need – which has already proved very challenging – and it is set to drop even further. That will increase the pressure on a restored Executive to deliver reform and improve efficiency, as well as confronting it with difficult choices over cutting services or raising more revenue. Another option would be to put a floor under the Block Grant funding in line with relative need, as in Wales, but that would need the agreement of the UK Government."
According to the NIFC, the departments of Education, Justice and Economy will face "larger-than-average real cuts … with the cut in Education in notable contrast to the planned rise in English schools spending". In contrast, the departments of Health, Infrastructure and Communities face smaller real cuts than the average.
The NIFC said that the while the financial challenges created by inflation and pay pressures were common across the UK, they were "exacerbated" in NI by "weaknesses in budget management" and the ongoing absence of the Executive.
An additional £297 million was claimed from the Treasury Reserve in 2022 to 'balance the books' in Northern Ireland following an overspend to meet to day-to-day costs of public services.
Under normal circumstance, the Treasury would have required this additional claim to be repaid in full this year, but it has been deferred until 2024-25.
This deferral has resulted in potential departmental funding cuts being limited to 3.2%, down from the predicted 5.5%. However, it has also resulted in NI foregoing any boost to the Block Grant, as any spending increases will be put towards repaying the Reserve claim.
Commenting on the issue, Sir Robert Chote, chair of the Council, said: "For many years NI Departments benefited from funding-per-head that was not only well above spending in England but also above estimates of relative need. The funding premium has fallen sharply to broadly in line with relative need – which has already proved very challenging – and it is set to drop even further. That will increase the pressure on a restored Executive to deliver reform and improve efficiency, as well as confronting it with difficult choices over cutting services or raising more revenue. Another option would be to put a floor under the Block Grant funding in line with relative need, as in Wales, but that would need the agreement of the UK Government."
According to the NIFC, the departments of Education, Justice and Economy will face "larger-than-average real cuts … with the cut in Education in notable contrast to the planned rise in English schools spending". In contrast, the departments of Health, Infrastructure and Communities face smaller real cuts than the average.
The NIFC said that the while the financial challenges created by inflation and pay pressures were common across the UK, they were "exacerbated" in NI by "weaknesses in budget management" and the ongoing absence of the Executive.
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