Overall cut for Executive is worrying, despite its unexpected bonus
The UK Budget has meant that the Northern Ireland Executive has £12m more to spend in 2010-11 than originally planned.
That is a small adjustment in a helpful way, but will not have a big impact on the £370m imbalance that Sammy Wilson, as Minister of Finance, is facing.
If Northern Ireland is able |to make local adjustments to match the Chancellor’s statements, then the Executive would be considering an increase in capital spending |on roads — and whether the reduction in business rates in England should have an impact in Northern Ireland. Chances are that the Executive may decide that, with the current budget problems, these issues must be postponed.
The small print of the |Budget shows that compared to the year just ending, the Northern Ireland Executive faces an overall budget cut in 2010-11. Adding together current and capital spending, £10.2bn in 2009-10 will fall to £9.8bn in 2010-11.
This confirms that the funds available to the Northern Ireland Executive will fall significantly for the first time for many years. This sets a demanding piece of budget arithmetic.
One policy step by the Chancellor is to increase the proportion of Government and public sector contracts that are expected to go to small and medium sized firms. In England, the proportion is to rise by 15% in a market worth £3bn per annum. A similar policy change would be welcomed by many local businesses.
In total, the Budget is less painful for businesses and households than might have been feared. However, the pressure now passes to the Executive where a better balance of local funding and expenditure has become more urgent.
John Simpson is a leading economist and columnist for the Belfast Telegraph