Stormont’s power-sharing impasse will continue to hamper the Government’s budgets for Northern Ireland. The Government is set to set Northern Ireland’s budget amid the Stormont deadlock, with Northern Ireland Secretary Chris Heaton Harris, outlining the budget plan for 2023/24 in a written statement to Westminster ministers. This budget is designed to support the various sectors of Northern Ireland’s economy, social and political life. Permanent Secretaries, who have been in charge of public services since the collapse of Stormont in 2017, are expecting the tabling of the budget to bring about the most severe financial restrictions in recent memory. The new funding, tabled one month into the new financial year, is expected to contain severe cuts to public services to bridge the estimated £600 million shortfall. These cuts will likely significantly impact the provision of services, with many departments already facing significant staff shortages and a lack of resources.
Tabling budget
The Government is set to table a budget for Northern Ireland amid the ongoing political impasse in Stormont. This comes after the Northern Ireland Assembly failed to ratify a budget for the region for the third year in a row.
The Government’s proposed budget for Northern Ireland is set to include a range of measures to support essential services and jobs, including a package for the health service, investment in infrastructure and other measures to stimulate the economy and support businesses.
The Government has already warned that the budget may need to be revised to meet the shortfall, and the budget tabling will likely indicate how the budget will affect departments and services.
Many civil servants are hoping that the budget will be balanced in a way that minimizes the impact on public services and jobs. Still, with the political uncertainty that has dogged Northern Ireland for the past three years that may be a tall order.
Stormont faced an approximate £600 million black hole.
Last year, Stormont faced a daunting £600 million shortfall after local ministers resigned amid a heated political dispute over post-Brexit trade. In response, the Treasury stepped in and provided a £300 million advance down payment to help permanent departmental secretaries close the budget gap.
Stormont is again facing challenging budget decisions with the money due to be repaid this financial year. The Executive is also considering a range of alternatives to address the budget gap, such as introducing new taxes, cutting services, and increasing borrowing.
It is not yet clear what the outcome of these negotiations will be, but Stormont will have to take some tough decisions in the upcoming months to address the £600 million black hole.
Many are concerned that the cuts will have a detrimental effect on public services
The cuts will result from a £600m budget gap due to a lack of agreement on a new funding package for Northern Ireland. This is the latest in a series of budget crises that have been ongoing since 2017 due to the deadlock in Stormont.
The anticipated cuts, which Mr Heaton-Harris have described as ‘regrettable’, will severely impact public services across Northern Ireland. This includes reduced funding for schools and hospitals and a cut to the police budget.
The Government’s decision to introduce the financial package has been welcomed by the business community, with many arguing that it will provide the stability needed to attract investment. However, many are concerned that the cuts will have a detrimental effect on public services.
The secretary of state has refuted claims that he devised a “punishment budget.”
For 2022-2024, Chris Heaton-Harris has already presented a budget for Northern Ireland. His argument was in response to the Democratic Unionist Party (DUP) ‘s claims that Northern Irish nationals were unjustly punished. To reduce costs, Stormont may repay a budget surplus of £300 million over two years rather than one. He claims that reimbursing the 2022-23 expenditures over time will protect public services on the front lines. Despite the absence of devolved authority, Heaton-Harris emphasized that the budget does not punish anyone but ensures that services can still be provided. The DUP’s position on re-entering Stormont prompted him to respond, “Let’s wait and see what happens.”
Jeffrey Donaldson, the DUP’s leader, said his party was “extremely concerned” about the budgetary provisions for wage increases. He stated, “There are significant challenges here, and we are concerned about how the Northern Ireland Office handles them.” A flat budget is what the secretary of state called it. I want Stormont to be operational again, but it must be on solid ground.” It is not a “quick fix” to return to Stormont, he said.
Challenges still remain
The blow has been mitigated by allowing the repayment of last year’s £300 million overspending over two years instead of one. Rather than being immediately deducted from departmental funds, repayments will be deducted from any new funds sent from Westminster later this year. However, this will pose a significant challenge to the senior civil servants in Stormont’s charge.
That is not a formula for industrial harmony. Heaton-Harris stated that the overspending would be eliminated using any additional in-year Treasury funding. Should this not be sufficient, the remaining balance would be paid in 2024-25 by reallocating funds from previously announced funding packages for Northern Ireland. The possibility of utilizing financial transactions capital (FTC) as a funding source is being considered. Stormont consistently underspends this type of conditional capital funding Stormont can anticipate more money if the UK government allocates new funding to resolve public sector wage agreements in England. But if that money must be used to reduce the overspending, it could be challenging for senior officials to offer similar compensation agreements to public servants in Northern Ireland unless savings are found in other areas.
Ulster University economist Esmond Birney said the budget presented a difficult challenge for the Stormont departments. He characterised allowing the expenditure to be paid down over two years as the least bad option compared to immediately, which “would have implied huge spending cuts in this year”.
What latest statistics show
Now, just one month into the new financial year, the tabling of the budget has brought the prospect of significant cuts across the board. It is feared that public services will bear the brunt of the spending cuts, with a potential reduction in services delivered and job losses.
The Northern Ireland Executive has been warned that the budget must be passed before the end of April, or else Westminster could impose a budget on the region.
The Northern Ireland Executive is now facing the reality of an estimated £600 million black hole in its budget. To make up the shortfall, the Treasury provided a £330 million advance, which must be repaid by the end of the current financial year. This has caused great stress and pressure on the local ministers, who have had to make a series of in-year savings to fill the gap. It has also become a politically charged issue, with many accusing the Government of putting local services and jobs at risk due to their handling of the post-Brexit trade agreements.
The Northern Ireland Executive is in a difficult position, and it is yet to be seen how they will make up the shortfall in their budget. In the meantime, Northern Ireland’s citizens will have to pay the price for the political wrangling and the financial consequences of Brexit. Civil servants are preparing themselves for the worst in this looming crisis. With a financial black hole to fill and no end to the political impasse, they are bracing themselves for a harsh and potentially damaging settlement. The coming weeks and months will be uncertain and challenging.
