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£1bn worth of cuts will be felt for a generation, warns report

Over £1bn will be slashed from public spending in Northern Ireland between now and 2015, it was claimed today.

Any special case for the country to avoid the cuts could fall on deaf ears at Westminster, the Northern Ireland Council for Voluntary Action (NICVA) added.

Launching a major report on the challenges facing the economy, chief executive Seamus McAleavey warned frontline services could be at risk if the wrong approach was taken.

He said: “This is the most detailed external analysis yet of what is coming down the track and it makes for painful reading. It presents a significant test for our Executive and it is vital that the correct decisions are made. The choices made now will shape our economy and society for a generation.”

NICVA is an umbrella organisation representing voluntary groups.

A report compiled for NICVA by Oxford Economics, Cutting Carefully, said at least £1.2bn would have to be saved between now and 2015.

The Northern Ireland Executive faces making £128m in spending cuts following the emergency budget earlier this summer. It is not yet clear whether that will be incurred this year or next.

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Earlier, £367m of efficiency savings were announced for this financial year.

Government funding for the voluntary and community sector stands at £260m, 45% of the sector's income, NICVA said.

Northern Ireland receives a massive subsidy from the rest of the UK, calculated by looking at the difference between tax receipts contributed and public money received.

The report warned that if cuts were made across the board, they would amount to 8.4% of spending over five years. If the health budget was ring-fenced it would mean 15% reductions across all other departments.

“Protecting health and education would mean 22% cuts on everything else.”

Mr McAleavey said there should be no “sacred cows”.

“The Executive needs to be fully aware of the wider social and economic repercussions of every decision they make,” he warned.

“The very worst thing that could happen is panic or bad choices during the process, or worst of all delaying action, which is going to make our problems even greater.”

Public spending cuts will have a significant implication for Northern Ireland, as it depends more heavily on the public sector than elsewhere in the UK.

It is currently estimated that Northern Ireland has 31% of its employment in public services, compared to 25.9% in the UK as a whole.

The report argues that the harsh reality is that Northern Ireland “must raise more income or cost less to run, there is no alternative to this stark choice”.

It states that Northern Ireland must “transform the economy in such a way that public services cost less to run, or alternatively that the tax base (from local businesses and consumers) provides significantly greater tax payments to the Executive”.

On a more positive note, the report argues that spending cuts may well leave Northern Ireland with a leaner, more efficient and cheaper to run public sector.

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