Stormont officials begin scoping exercise to explore spending cut options
Stormont officials have commenced a scoping exercise to assess how looming spending cuts can be absorbed in the public sector.
The Department of Finance has asked the majority of Stormont departments to scenario plan for a 4%, 8% and 12% reduction in their resource budget for the coming two financial years.
The Department of Health has been exempted, as no health service cuts are envisaged in that area. Mitigation payments for benefit claimants impacted by welfare reform will also be ring-fenced, with some protection for the education and policing budgets.
The exercise will not result in any final spending decisions in the short term, due to the ongoing absence of elected ministers amid the powersharing crisis.
The information will however be used to inform the formulation of future budgets, whether that be by a Stormont Executive or direct rule ministers.
As a result of decisions already taken by the Treasury, Stormont's resource budget will flat-line at around £10 billion over the next two years, which means a reduction in real terms when inflation is factored in.
Officials are scoping out how to free-up funds from within the current allocation to address pressures that will no doubt emerge in the 2018/19 and 2019/20 financial years.
The individual departments will now engage with their arms length bodies to establish what impact the three scenarios would have on service delivery.
In terms of money for capital projects, Northern Ireland will receive more from the Treasury in the coming years.
The budget is around £1 billion in this financial year, due to rise to £1.095 billion in 2018/19, £1.160 billion in 2019/20 and £1.230 billion in 2020/21.
In that context, departments are not being asked to assess the impact on cuts to their capital budget, rather outline what capital spends they envisage in the coming three years.
Given the prospect of future financial decisions having to be taken in Westminster if devolution is not restored, the Northern Ireland Office is being kept informed of the scoping exercise.
A Department of Finance spokeswoman said: "Under normal processes, at this time of the year NICS (Northern Ireland Civil Service) departments begin budget planning for the next financial year.
"The Department of Finance has commissioned an information gathering exercise to collect the necessary data that will allow a future Executive to make key, informed decisions on a Budget for 2018-19 and beyond.
"This process is for information-gathering purposes only, covering a number of scenarios for non-protected areas. It will be for an incoming Executive to make decisions about funding levels and final Budgets.
"Similar to previous budgets it is proposed to provide full protection from reductions for health and welfare reform with some protection for education and PSNI budgets."