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Emergency £100m loan from Treasury eases Stormont budget crisis

Emergency £100 million loan from the Treasury: Department of Health will receive £60m and the Department of Justice will receive nearly £30m
Emergency £100 million loan from the Treasury: Department of Health will receive £60m and the Department of Justice will receive nearly £30m

By David Young

A Stormont budget crisis has been temporarily alleviated after Sinn Fein and the Democratic Unionists voted to accept an emergency £100 million loan from the Treasury.

Northern Ireland's power-sharing Executive voted on Thursday night by a majority to accept the deal offered by Chancellor George Osborne - a move which enabled the devolved administration to agree a quarterly reallocation of funds and reduced the prospect of a feared breaching of annual spending limits.

The offer to utilise the "exceptional" access to the National Reserve was opposed by the three smaller parties in the mandatory coalition - the Ulster Unionists, SDLP and Alliance - which have accused the DUP and Sinn Fein of kicking the Executive's financial problems down the road.

The £100 million loaned will be subtracted from Stormont's budget next year and ministers have still not reached an agreement to implement the UK Government's welfare reforms in the region - an impasse that has led to an £87 million penalty from the Treasury this year, with a the sum rising to £114 million next year if progress is not made.

The October monitoring round deal struck tonight will see an additional £60 million allocated to Stormont's under-pressure Health Department and £29 million for the Department of Justice to boost funding for the cash-strapped Police Service of Northern Ireland (PSNI) and boost the legal aid coffers.

Other notable allocations include almost £14 million to support business promotion agency Invest NI and some flagship sporting events; and an additional £1.3 million for the victims' sector.

Earlier this month the head of the Northern Ireland Civil Service wrote to his counterpart in the Treasury warning that Stormont was on course to bust its budget as the Executive was locked in a logjam over the need to cut £220 million of in-year spending.

In a bid to avoid the doomsday scenario, DUP First Minister Peter Robinson and DUP Finance Minister Simon Hamilton approached Mr Osborne with the loan request.

The Chancellor responded positively but attached a range of conditions.

They included the requirement to implement cross-departmental cuts (with the exception of health and education) which were agreed in Stormont's June monitoring round and a necessity to devise a Treasury-approved spending plan for 2015/16 by the end of this month.

In a letter to Mr Robinson, the Chancellor made clear that such loans were not common place.

"Access to the Reserve is only granted exceptionally," said Mr Osborne.

"And there can be no expectation that further access will be available in future years."

Further reading

Peter Robinson on welfare row: Time we got real and returned to the proposal negotiated over a year ago

Welfare row: Hollow victory in this blame game would benefit no one

Welfare row: The changes, the cost, and the likely effects

Welfare row: Fears grow over collapse of benefits system as Peter Robinson issues stark ultimatum 

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