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John Simpson

Support for Northern Ireland business looks generous during coronavirus crisis, but more transparency needed

John Simpson



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Finance minister Conor Murphy has said every department can expect to have a real increase in spending

Finance minister Conor Murphy has said every department can expect to have a real increase in spending

Photo by Kelvin Boyes / Press E

Finance minister Conor Murphy has said every department can expect to have a real increase in spending

Was Northern Ireland told when the Executive was restored that the public spending budget would increase by up to £2bn?

Setting aside the special Covid-19 allocation, the actual budget for 2020-21 seems to have increased by less than £1bn.

Conor Murphy, MLA, is a refreshingly competent Minister of Finance. He has challenged the Treasury.

However, his budget presentation falls short on this challenge and on the detailed decisions needed for an informed debate.

The budget statement on March 31 was not a full budget: it was a partial expenditure statement of the main (but not all) features of a budget.

No information has been published on the expected level of spending on AME items: the annually managed expenditure on social security and pensions etc. AME nearly doubles the level of Government spending here.

Because of the special arrangements to meet qualifying Covid-19 spending, the detailed figures are an unusual mixture of spending that would normally qualify as being supported by the Barnett formula, as well as additional Covid-19 items.

There are exceptional items of public spending that lie outside Barnett, such as the Treasury spending in NI to pay for the subsidies for the job retention scheme and the self-employed support package.

At this stage the cost of those job retention schemes is a further open-ended commitment.

The £912m estimate will be a serious understatement of the eventual local spending

The scale of the generous Treasury support to pay the costs of Covid-19 is understated when Conor Murphy refers to the £912m allowed for Covid-19 funding, which essentially refers to the funds which will be administered by Stormont.

The £912m estimate will be a serious understatement of the eventual local spending.

Disappointingly, Mr Murphy gave no evidence on the likely wider impact of his spending allocations for 2020-21.

He had enough confidence to say that every department would have a real increase in spending when compared to 2019-20.

However, comparisons with the year now ending were not offered.

Pointing to the changing public spending patterns, the Minister said the block grant is £360m below pre-austerity levels: presumably meaning before the Conservative Government made big reductions in a range of social security schemes.

When the comparable NI public sector spending total for 2019-20 was announced, a year ago, the current spending by NI departments was expected to be £11.4 bn.

For 2020-21, excluding the first tranche of special Covid-19 spending, the budget has allocated £12.2bn.

Allowing for inflation, this suggests that (before Covid-19) the expected level of spending would be up by 5%, giving some weak support to a claim that austerity has ended.

A more encouraging feature of these spending plans emerges in the allocation for capital spending, which has risen by 14% to reach £1.64bn. Over £89m is added to the capital budget of the Department for Infrastructure. No specific projects were identified.

Planning and controlling public sector spending in the full year 2020-21 is going to be exceptionally difficult

The Minister has partly explained the lack of detail in his public spending announcement by saying that he will make a fuller statement in the near future, when he will be able to give greater detail on key decisions. At this stage, the Minister's statement is silent on questions such as housing provision and financing, the operational budget of Translink, and any easing of the financial strains in the education sector.

Planning and controlling public sector spending in the full year 2020-21 is going to be exceptionally difficult.

Almost every public service will be claiming for an adjusted budget as they itemise the exceptional arrangements to cope with concessions, extra costs and social priorities while the health crisis is managed and the economy takes a very large hit. Nevertheless, the Treasury will be monitoring how the NI Finance Department accounts for variations in spending. Accounting officers will face a testing time in the second half of 2020-21.

Conor Murphy is delivering a challenging remit on behalf of public sector services. He should be more transparent.

Belfast Telegraph