Stormont Finance Minister warns Northern Ireland faces deep cuts ahead
The Finance Minister has warned that Northern Ireland faces at least two years of deep current spending cuts despite some concessions in yesterday's Budget.
One good point is the creation of our first enterprise zone in Coleraine, near the university. Another is that the amount we get under the Barnett formula, by which our block grant is allocated by London, will increase over the next two years. These fluctuations are known as Barnett consequentials.
Summing it up, Simon Hamilton said: "I welcome the enterprise zone and there is positivity on the Barnett consequentials but times are getting tough particularly on the resource side. The emphasis is now increasingly on increasing capital budgets to get the economy kickstarted."
"There will be an improvement on the capital side and we are seeing our capital budget rise above £1bn for the first time in three years," he said. "We want to see that grow and to invest it in roads and schools and housing in particular."
But that will mean cutting down day-to-day spending on wages and services, he warned. "The change in current expenditure between this financial year and 2015-16 is a 2.1% reduction, something between £200m and £300m which will have to be saved."
The squeeze will be all the tighter because the Executive has failed to agree welfare reform. Under the British reforms, welfare spending is being reduced in England and Wales. If we keep the old system we have to start handing money back to the Treasury, starting with £105m this year and rising steadily after that.
Mr Hamilton hopes the enterprise zone at Coleraine will be the first of several in the province. Firms in the enterprise zone get 100% tax allowances for spend on plant and equipment. The incentive is designed to attract firms who have a high capital spend and the anchor tenant on the 20-acre site is 5NINES, an international data management company which is building a multi-million pound data centre on the site.
"The enterprise zone ensures that the data centre happens," Mr Hamilton said.
5NINES, which handles cloud internet services for major firms, will use only about five acres of the 20-acre site, leaving room for other hi-tech firms to move in.