Impasse on welfare reform hits us all
Normally, June monitoring rounds are benign events where the Finance Minister announces how much has been carried over from the previous financial year and, added to the reduced requirements received, the Executive makes a number of allocations.
That is not the case this year. Unfortunately, this monitoring round signals the radical change in the public expenditure environment that I have been warning about for some time. While this pressure on public finances is due to a range of factors, the situation is not assisted by the ideological intransigence displayed by Sinn Fein and the SDLP that is going to have serious consequences for every single person within Northern Ireland. Failure to move forward on welfare reform will impact on public services over the rest of this financial year and beyond.
I find myself having to announce immediate in-year budget cuts for all departments, excluding health and education. These cuts will see spend in departments like Regional Development, Justice and Enterprise, Trade and Investment immediately decreasing by 2.1%. This means less money to create jobs, police our streets and improve infrastructure.
That is only the start. The Executive has agreed to further cuts to be processed in the forthcoming October monitoring round to cover the welfare reform penalties of £87m.
The reductions of £77.9m to departmental budgets now are harsh but necessary. They are to assist in paying for over £30m of commitments already agreed by the Executive as well as a much needed allocation of £20m to DHSSPS.
The reductions that departments face in October will be every bit as harsh but they are completely avoidable. They are harsh because the impact they will have upon public services will be devastating because of the inability of some parties to show the leadership required on welfare reform. I have warned that inaction on welfare reform would have dire repercussions for our public services and this is the beginning of those consequences being felt.
Simon Hamilton MLA is Minister of Finance and Personnel at Stormont