Public spending cuts predicted by Finance Minister Sammy Wilson will have the biggest impact on projects to build roads, schools and hospitals, according to one of the province’s leading economists.
Mr Wilson said yesterday that cuts of more than £370 million to the Northern Ireland budget would have to be agreed by ministers before Christmas in order to balance the books at Stormont. It is feared the reduction are only the tip of the iceberg and that further drastic cuts to the local Budget will be enforced by Westminster following next year’s General Election.
Economist John Simpson said the most likely the initial cuts will come from the Executive’s capital budget, which allocates funds for major infrastructure projects.
“He was talking about reducing the capital budget by £170m which is easily done but will not be popular,” said Mr Simpson.
“It will come from roads, education projects and some health projects. It will be dressed up as the capital process being slowed down and projects being pushed back into future years.”
He estimates a further £50m of revenue could be raised if the Executive ended the freeze on regional rates and increased them to levels they were at three years ago.
That would still leave £150m to find and this would have to come out of each department’s planned expenditure, said Mr Simpson.
“He is going to have to say to every department that he wants 3% or 4% cuts from their budget and they will have to come up with proposals, which some of the Ministers will go mad about,” he said.
The Finance Minister confirmed that for the 2010/11 financial year the Executive would consider adjusting all departments' expenditure, based on existing allocations or targeted reductions in specific areas.
However, Health Minister Michael McGimpsey, whose department has the largest budget at Stormont, said the Health Service would struggle to make further cuts.
Mr McGimpsey said: “I have been telling you for months that times are hard for us in the Heath Service with challenging efficiency savings of some £700m and increasing demands. However, the Assembly refused to exempt the service from efficiency savings in April.
“As I said at the time of the budget settlement, it was as good as it gets but it was not enough. The situation has been further exacerbated by the cost of the current swine flu pandemic.
“I am still in a position of having to fight for the money I need to protect the people of Northern Ireland and I trust that the Executive recognises this in its response to September Monitoring.
“My Department has now received proposals to achieve break even from the Trusts, including Belfast and these are currently being considered. No decisions have been made.”
Social Development Minister Margaret Ritchie has previously said her department is already facing a shortfall in the housing budget as a result of the worldwide economic downturn, which has resulted in low capital receipts.
Ms Ritchie said earlier this year that unless there is a pickup in the economy the DSD anticipates shortfalls of about £100m a year in the Housing Executive budget in the next two years.
Earlier this month Ms Ritchie said a lack of funds meant she could not help a police officer and his family forced from their home by a dissident threat.
The Finance Minister said delaying the introduction of domestic water charges was responsible for most of the budget problems, and that this had cost in excess of £200m a year.
Mr Wilson said yesterday that this was not sustainable in the long term and Government sources have indicated that water rates are likely to be introduced by 2011.