Belfast Telegraph

Northern Ireland budget doesn't address public sector problems


By John Simpson

The Northern Ireland budget for 2018-19 has been tabled by the Secretary of State in the absence of a local Executive. But despite the allocation of £410m as a result of the DUP agreement with the Government, the recurrent budget for public services in 2018-19 will be lower, in real spending, than comparable spending in 2017-18.

Recurrent spending:

2017-18 £10.52bn

2018-19 £10.51bn*

2018-19 £10.78bn**

*Corrected for inflation **Cash

There are two other parts of the budget. The allocation for capital spending allows for an increase of over £200m, which is welcome. The third main part of the budget, for annually managed expenditure (pensions, social security etc), has not been published.

The budget is an inadequate response to the range of challenges facing the public sector. In the absence of the Executive, political parties have again avoided the challenge of the serious policy decisions that need to be made. Representatives should have been challenging the Treasury to maximise the funding that could be available and making decisions to allocate funds to tackle local priorities.

The financial agreement between the DUP and the Conservative Government has provided a degree of alleviation of the emerging budgetary pressures but, as a special arrangement, has simply partially disguised the continuing difficult budgetary outlook. A Northern Ireland budget should demonstrate how the budget was changing from year to year and from one priority to another. Then looking forward, the changing allocation of funding should be supported by an explanation of the rationale of the changes. This budget statement, as published, falls well short of a document that adequately informs citizens.

Since devolution, ministers of finance have presented what can best be described as a minimal statement of spending with little emphasis on the sources of the revenue expected. Also, only minimal aggregate spending allocations are identified. Then, in a complication, spending classified as 'annual managed expenditure' is usually set out in supplementary detail.

Readers will look in vain for a reconciliation, in simple form, of revenue, expenditure, capital spending and (sources of) borrowing. They will also look in vain for a tabulation of information for recent years, say the last five, to see the overall trends. Readers will also need to be careful to examine whether the published information is expressed in 'current prices, not corrected for inflation' or in 'real terms, corrected for inflation'.

One key conclusion is critical: in the last two years the NI budget for devolved current and capital spending has been held, by the Treasury, at nearly the same total, year by year, when measured in current prices. In other words, the budget has been decreasing in real terms. Even allowing for the one-off £410m special support from the DUP agreement with the Conservatives, in 2018-19, the current spending in the NI budget in real terms will decrease by about £150m assuming a pricing effect of 2.5%.

The budget, as presented, comes close to assuming that public services will continue in 2018-19 on the same basis as 2016-17 and 2017-18. The only adjustment was for an increase in the regional rate where the increase just about kept pace with inflation. Local rates bills are still well below those in Great Britain.

Spending allocations favoured health (with an extra £270m, 5.5%) and education. The terse language of the budget statement falls well short of an explanation of the impact of what will be real cuts for seven of the nine departments. The Secretary of State needed to present this budget but couldn't she have made it more acceptable?

Belfast Telegraph

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