Hundreds of millions of pounds of investment will be lost and thousands of potential jobs not created because of budget cuts and loss of the funding, the department has warned.
The consequences could be severe: apprenticeships could be cut in half, university places reduced, tuition fees could go up, and support for those in further education slashed, the Assembly’s Economy Committee was told.
The three-year proposed budget will not even cover the costs of “inescapable pressures” — the funding necessary just to keep the department going, the department’s finance director Sharon Hetherington said.
Overall, the loss of European funds amounts to more than £100m over three years, mainly affecting skills training and Invest NI’s innovation funding. The budget will increase by a little more than £40m over the same period,
“We already knew Brexit was terrible for the Northern Ireland economy, but today at the Assembly Economy Committee, civil servants laid bare the devastating scale of EU funding loss for things like apprenticeships and skills,” said the SDLP’s Matthew O’Toole.
“The department is losing more than £100m in core funding from the EU, which dwarves the entire increase in the department’s budget the next three years.”
Invest NI has already committed most of its budget for the next two years while facing an annual cut of £23m in each of the next three years a year, Ms Hetherington told MLAs.
The agency estimates this could result in the loss of between 4,000 and 6,000 potential jobs and overall investment of between £430m and £584m.
“Invest NI’s ability to deliver for Northern Ireland and its citizens will be significantly impacted,” she added.
Ms Hetherington painted a stark picture of what could happen over the next several years, particularly in relation to skills training, higher education funding and support for innovation.
The draft budget “does not allow the DfE to stand still let alone improve the performance of Northern Ireland in key skills and innovation indicators”.
She added: “In addition, the lack of EU funding and the financial tails of earlier Covid initiatives are inescapable and solutions need to be found elsewhere.”
The draft budget has not prioritised the economy and there is no additional funding for the 10X strategy, the department’s core plan to drive the economy.
Among the options being considered are a reduction by 50% in the number of apprenticeships overall and no new programmes, capping the numbers able to access youth training, and the cessation or reduction of support for those in higher education.
She also raised the possibility that numbers attending university could be cut, or tuition fees increased.
All these will impact lower income families, have a detrimental effect on the job market and economy, as well as the health and wellbeing of many young people, Ms Hetherington added.
Mr O’Toole said: “These numbers aren’t abstractions, they are critical funding for apprenticeships, skills training and economic development. The DUP has treated the Economy Department like a fiefdom for the past 15 years, but the damage their Brexit misadventure has done to that department and our economic prospects is truly shocking.”
MLAs also heard the department sent back to the Department of Finance approximately £30m of the £286m it was allocated in Covid recovery cash.