Belfast Telegraph

Wednesday 23 July 2014

Hundreds of millions lost as Stormont underspends

Richard Pengelly said millions were returned from Stormont to Westminster coffers and lost from the Northern Ireland budget because of underspends across the Executive's 12 departments
Richard Pengelly said millions were returned from Stormont to Westminster coffers and lost from the Northern Ireland budget because of underspends across the Executive's 12 departments

Hundreds of millions of pounds of cash, which could have been used to fund new roads, build homes, fix the out-dated water system or even provide more hospital beds, has been lost by Stormont, a top civil servant has revealed.

During a regional development committee hearing, the department's permanent secretary, Richard Pengelly, said millions were returned to Westminster coffers and lost from the Northern Ireland budget because of underspends across the Executive's 12 departments.

"Several hundred million pounds of money which could and should have been spent here, was not," said Mr Pengelly, who previously held a senior role in the Department of Finance and Personnel.

"We had a fundamental problem about underspend, money which was not spent and went back to treasury."

Yesterday evening, the department of finance and personnel was unable to provide a figure of how much money the senior civil servant was referring to.

However, his comments were made in the context of events dating back to the early 2000s.

It's money which could help address needs and shortages in health, education and housing in Northern Ireland, as well as the well-documented funding gap in NI Water's budget – something, it has been argued, that should be bridged by imposing a tax on Northern Ireland residents.

The money could total at least £300m and potentially many hundreds of millions more.

In 2010/11, it was thought around £300m was being returned to Westminster after a change in treasury rules.

The then Stormont finance minister, Sammy Wilson, said the money was being built up to "sort out a hole in finances" and that it had been "swiped away" because of the change of accounting rules.

Last year, the Department of Social Development (DSD) alone revealed it had a £31m underspend.

And this year the Housing Executive, which is under the DSD, said it would have an underspend totalling over £35m, due mainly to delays issuing planned maintenance contracts.

Underspends are not a new issue facing Stormont. Five years ago underspending by government departments was criticised by the assembly's finance committee.

The committee claimed over £100m remained unspent in each of the past three years and called on all of the departments to be more efficient.

Then committee chairman, Mitchel McLaughlin of Sinn Fein, said there was a "culture of underspend".

He said the money not spent could have been "used to address a range of needs rather than being left to accumulate".

"One of the major issues arising from the committee's investigations is the unacceptable level of underspend by departments," Mr McLaughlin said.

At the time, he said the committee had made recommendations for improving financial management by departments and for maximising the impact from available resources.

Mr McLaughlin and the current chair of the finance committee, Daithi McKay, were unavailable for comment last night.

However, a Sinn Fein spokesman said the party's position had always been against underspending and that unused funding should be redistributed and used in other areas that may need it.

Yesterday's meeting of the Executive is believed to have debated the latest departmental underspends and the results are expected to be announced in the Assembly on Monday by Finance Minister Simon Hamilton.

The money is understood to have included the budget earmarked for the collapsed A5 road project, which will now be redistributed to a number of other projects.

Four key areas where the money could be spent...

ENVIRONMENT

The money being sent back to central government could have been used to reprieve the Exploris aquarium at an estimated cost of £500,000. Just slightly over £1m would deliver on-road cycle training to every P6 child and a major contribution to tackling fuel poverty and cutting carbon emissions could be made by delivering the Green New Deal – estimated at £300m over four years. Belfast and Derry could also be transformed in to cycling cities by investing just £50m.

CRIME AND POLICING

Around £120m would solve all the wrangling around Northern Ireland's first police, prison and fire officer training centre at Desercreat outside Cookstown. There are currently around 6,900 police officers in Northern Ireland, but about 200 leave each year through retirement and other reasons. A huge cash injection would allow for a much-needed boost in numbers above the 100 recruits currently being sought. The police union says the force needs 10 times that.

CONSUMER SECTOR

Finance Minister Simon Hamilton has said it would take between £60m and £90m to abolish air passenger duty, the contentious tax on flights, currently £13 per person. It would also cost Northern Ireland more than £300m to lower the rate of corporation tax to 12.5%, the same level as the Republic, which will help attract greater levels of inward investment. It is currently 23%. A £60m investment in a network of food banks would also help feed families on the breadline.

HEALTH

The massive underspend could pay for the £250m costs that alcohol misuse causes the Health and Social Care Sector annually. Within cancer treatment, it would pay for several new Northern Ireland Hospice buildings – the charity has been campaigning to raise £11m for just one new centre in north Belfast. The money could have also paid for the new South West Acute Hospital in Enniskillen. The state-of-the-art hospital cost £276m to build and equip.

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