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Chancellor Sunak warns of 'long term scarring' as NI receives £900m economic boost

The Northern Ireland Executive will have another £900m in funding for 2021/22, the Chancellor said as he warned of “long term scarring” to the UK economy from Covid-19.

In his Spending Review, Rishi Sunak also said NI would also get a share in over £100bn of capital investment across the UK in 2021/22.

But he said the UK economy would take a hit of 11.3% this year from the impact of Covid-19, with the UK set to borrow £394bn - a record for peacetime.

The DUP welcomed the cash injection, however MP Sir Jeffrey Donaldson urged the chancellor to widen public sector pay increases to include other key workers, such as those in the armed forces.

"We will work with the Northern Ireland Executive to ensure this is used to support our hospitals and help protect livelihoods," he said.

"It is also welcome that frontline health workers will receive a well-deserved pay rise but it is grossly unfair to other hard working public servants who did not step back from their work at the height of the covid-19 pandemic when roads were empty and most people were at home anxious about the uncertainty.

"We consider our council staff who ensured the streets were clean and bins collected, our armed forces who helped get PPE and testing to where it was needed, the police officers who still tackled crime and those who kept our public transport rolling.

"I have urged the Chancellor to consider all those public sector workers who stood tall and carried on when there was no sign of a vaccine and no sign of lockdown being lifted."

Sir Jeffrey welcomed the governments support for workers through the furlough scheme, but said more needed done to help the aerospace sector.

The Chancellor said Northern Ireland’s £900m was “new funding” which was more than double the £400m provided in the 2019 Spending Round.

He said the funding was to “help NI fight coronavirus and build back better”.

The £900m has been allocated to NI through the Barnett formula, which governs UK government spending on devolved regions, and is to be spent on local matters such as health and social care, education and housing.

The Treasury said the £900m is additional to £2.8bn extra funding guaranteed to the Executive in the present year as it face coronavirus and its impact on the economy.

Wales receives £1.3bn whie £2.4bn will go to Scotland.

Mr Sunak said: “The commitments we have made at this Spending Review will help people across NI to bounce back from the economic impact of coronavirus.

“We will provide billions of pounds in the fight against coronavirus, deliver the peoples’ priorities and drive the UK’s recovery.

“The Treasury is, has been, and will always be the Treasury for the whole of the United Kingdom. And this is a Spending Review for the whole of the United Kingdom.”

Northern Ireland Secretary Brandon Lewis said: “Today’s announcement by the Chancellor of over £900m additional funding for NI is brilliant news. This is in addition to the £2.8bn guaranteed by the UK Government in 2020/21, and above the £216m allocated at the Spring Budget.

“This additional funding can be used to support devolved areas such as health and social care, education and housing.

“NI will also benefit from a share of more than £100bn capital investment across the UK. This investment will help improve connectivity and productivity across the United Kingdom, including in Northern Ireland.

“As we continue to battle the economic upheaval of the Covid pandemic on our society, today’s announcement has once again shown that this Government’s number one priority is to ensure that health, jobs and livelihoods are protected. Everyone deserves to have a secure financial future, and provide their families with hope and stability as we move forward into 2021.”

Mr Sunak said the Government will also increase the National Living Wage by 2.2% to £8.91 an hour.

Nurses, doctors and others in the NHS will get a pay rise, but for the rest of the public sector, any increase will be paused, affecting firefighters, teachers, the armed forces, police, civil servants, council and Government agency staff.

However, the 2.1 million public sector workers who earn below the median wage of £24,000 will be guaranteed a pay rise of at least £250 next year.

Nearly £3bn would be provided to Work and Pensions Secretary Therese Coffey to deliver a new three-year “restart programme” to help more than one million people who have been unemployed for more than 12 months to find new work.

He added unemployment is predicted to rise to a peak of 7.5% - or 2.6 million people - in the second quarter of 2021.

Mr Sunak said the impact of Covid-19 would be long-term. “Even with growth returning, our economic output is not expected to return to pre-crisis levels until the fourth quarter of 2022 - and the economic damage is likely to be lasting. Long-term scarring means, in 2025, the economy will be around 3% smaller than expected in the March Budget.”

Belfast Telegraph