Belfast Telegraph

John Simpson: Taking a sensible look at Stormont's finance puzzle

John Simpson

By John Simpson

There is a serious need for a better-informed debate about the way in which Government services are financed. Unfortunately, there is no easy way to examine this, since the Department of Finance makes it difficult to find answers to basic questions.

The recent BBC programme Spend It Like Stormont showed that there is no comprehensive statistical presentation of the main components of the devolved budget.

The Department of Finance could easily offer a codified review of Stormont finances but instead offers confusing detail.

The Northern Ireland budget, as administered by the Executive, is a difficult jigsaw for even a well-informed enquirer.

For example, the recently published (so-called) budget for 2019-20 offers only a series of selected parts of the whole picture.

Examining the six-page summary, expenditure in Northern Ireland totals £13.4bn. However, this only shows departmental spending, as defined for departmental expenditure limits (DEL).

As the BBC programme showed, taking a comprehensive view of all public sector spending, Northern Ireland's spending is nearer £26bn. The DEL concept excludes spending by local councils and also excludes all central government spending classified as annual managed expenditure (AME).

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AME is a large part of local spending which includes the main funds to finance social security payments, and payments from central Government to meet state pension commitments. These payments are classified separately because the payment rates are set by the Treasury, and the level of spending in Northern Ireland is determined on national criteria unaffected by Stormont decisions. That distinction does not justify simply omitting the costs in a comprehensive NI statement. Yet, readers will look in vain for the AME figures in the budget for 2019-20.

Although the Department of Finance does publish some partial headline details in a form that is described as an NI budget, even a careful reading will leave an observer with an unsatisfactory and limited understanding of the main elements that go into different parts of the presentation.

For example, MLAs taking part in any discussion of the local impact of the public sector would naturally be keen to understand the year-to-year changes in the main items of spending. The Department of Finance paper does not offer comparisons of annual spending over a three or preferably five-year period.

Annual totals would be a baseline for a calculation of changes in terms of current costs and adjustments to show whether, inflation adjusted, spending was increasing or decreasing.

Critical to spending figures for a period of years, there is an interest in how the different components of the spending budgets are changing. Are the main AME spending headings rising or falling as a part of the overall budget?

Have the years of austerity been reflected in a fall in spending on social security?

Also, given the crisis in health and social care, is that component of NI spending of £6.1bn an increasing share of the total departmental spending and, if so, by how much?

A critical element missing in the DoF budget statement is an overview of the sources of funding and how they are changing.

The phrase 'block grant' is missing. Local observers need to be better informed on the changing size of the annual block grant and the budget should show how UK Budget changes feed into local finances.

In parallel, the (so-called) budget is silent on how Stormont will finance its capital budget, whether through block grant funding, specific borrowing or drawing on financial transactions capital.

In contrast to the unsatisfactory presentation of the spending and revenue components, the recent budget statement does identify the supplementary funds for Stormont in 2019-20 agreed as Fresh Start funding (£125m) and also from the confidence and supply funding (£405m).

Making the budget presentation comprehensive and coherent would be a useful contribution to better public understanding.

Do the Comptroller and Auditor General have a role to play in assessing what the Department of Finance should be doing?

Belfast Telegraph