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Northern Ireland 'faces crucial impact from spending cuts drive'

Published 21/07/2015

The Stormont 2015-16 Budget remains fundamentally imbalanced, a leading economist says
The Stormont 2015-16 Budget remains fundamentally imbalanced, a leading economist says

Cuts of up to 40% to some government spending in Northern Ireland would have a crucial impact, a leading economist said.

Chancellor George Osborne has warned that ministers in unprotected departments would be expected to deliver "more for less" in the Government's drive to save £20 billion over the next four years.

Treasury Chief Secretary Greg Hands is writing to departments to set out plans to achieve savings of 25% and 40% by 2019-20 - in a repeat of what happened at the start of the last parliament in 2010.

Dr Esmond Birnie, PwC chief economist for Northern Ireland, said: "This will have a crucial impact on Northern Ireland because through the Barnett formula the large reductions in spending in London will be translated into reduced funding for the devolved administration."

As part of the efficiency drive, Mr Osborne has signalled that he wants departments to draw up plans to sell off billions of pounds worth of land and other public sector assets.

A document setting out the scope of the spending review, which will report on November 25, confirmed additional investment in the NHS.

Dr Birnie said the Stormont 2015-16 Budget remains fundamentally imbalanced.

"The passing of the Welfare Bill in Westminster on Monday night throws into even sharper relief the Executive's impasse on welfare."

He said proposed cuts of up to £20 billion by 2020 posed a particular challenge to the Executive.

"The Executive previously did not use the opportunity posed by the previous spending review to introduce fundamental reform.

"Now austerity is coming with a vengeance and we have a local 2015/16 Budget which is broke and an impasse over welfare reform."

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