Belfast Telegraph

Public services will pay as Stormont bids to keep order

By John Simpson

The Stormont budget for 2015-16 was inevitably going to prove difficult. Before the Stormont House Agreement the prospects were frightening. Now, with the Agreement, the prospects have been eased to the point where they can be described as only very difficult.

Northern Ireland is disproportionately contributing to the overall UK budget deficit, possibly by more than £5bn a year, when there is a UK deficit of nearly £90bn. As a consequence, Northern Ireland is living with reducing real public sector expenditure or what are described as austerity cuts.

Popular sentiment wants to challenge a more difficult austerity budget. If austerity is the necessary price of budget management to ensure that overspending is avoided, then the so-called austerity should be seen simply as orderly financial management.

Can Northern Ireland plead that unwelcome austerity measures should be rejected? Alternatively, does Northern Ireland need to learn that the scale of supportive finance from the Treasury has been well above the levels that could be justified even when allowance is made for the impact of greater social need and rebuilding the economy?

These tensions are now in evidence as the government departments explain how their budgets must adapt for the year 2015-16. As part of the new arrangements, the plans to reduce the size of the civil service by over 2,000 people have been launched. Further plans to reduce the size of the public sector are also in contemplation.

Critically, even though individual ministers will explain the pain of their adjusted budgets, the Stormont House Agreement means that there is now a collective budget responsibility for each to live within their allocation. No surprise, therefore, when the details come with qualifications of regret and difficulty. As these words are being written, there are reports of problems affecting functions such as health and social services, justice, universities, education and regional development.

The budget for the Department for Regional Development (DRD) has attracted high-profile comment and reaction. A cash reduction of more than £40m - or over 10% - must be found.

The chief executive of Translink, David Strahan, made headlines when he said that without some relief from the budget constraints imposed on Translink the very future of that organisation would be in doubt. DRD also faces problems in decisions on finance for Northern Ireland Water, maintaining the roads infrastructure and support for rural transport services.

The DRD problems stem from a budget of £381m in 2013-14. That then reduced to £358m in 2014-15, and will further reduce to £334m in 2015-16.

Each of these sections of the DRD budget poses serious short-term and longer-term consequences. The roads budget is a critical infrastructure requirement and, after various reductions in recent years, the lack of adequate maintenance is becoming more obvious even to non-expert observers.

For Translink, the year 2014-15 just ending will show a trading loss and exceptionally the minister has given a direction to the civil service to allow an overspend. Such is the scale of the Translink deficit that, even with some corrective changes to revenue and costs, 2015-16 will bring a further deficit. The deficit is judged to be larger than might be offset by further fare increases. Unhappily, service reductions and reduced employment will also contribute to reducing the deficit, although even then it may not disappear.

In the absence of other radical actions, delivering public services will continue to have serious problems.

The price for subsidising water services, keeping rates lower than in Great Britain and offsetting extra welfare spending is being paid in other poorer public services.

Belfast Telegraph

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