Stormont Budget Hit In Treasury Claw-Back

Although Northern Ireland's Finance Minister and the First and Deputy First Ministers raised their concerns in London, some £300m of Westminster funding is being removed from the Stormont Executive.

This is to "sort out a hole" in the Treasury's finances, Minister Sammy Wilson has said.

The Finance Minister said he and his counterparts in Wales and Scotland "fought vigorously" to block the move that allowed departments to carry money over to the next financial year, but Treasury rules have now been changed without notice.

This means - for example - the NI Department of Education is losing £87m which had been set aside.

Up until 2008, the Department of Education in Northern Ireland had accumulated a reserve of £87m.

Under the new arrangements, the money will no longer be available to schools to draw on to cover future spending plans.

"The Treasury always allowed this. Then, without notice, a decision was made to take it away. It was really just swiping money which had built up in Northern Ireland to sort out a hole in their finances," said Mr Wilson.

Undeterred, the Minister for Education Caitriona Ruane published her budget plans for the period 2011-12 to 2014-15. This follows the publication of the Executive's draft Budget in December.

The Minister revealed that the outworking of the Treasury's earlier withdrawal of £4bn from the Block Grant had left her with an overall gap of £300m in resource spend to cover by the end of the four year period with a particular challenge in the initial year with the need to find approximately £150m in savings.

"The Executive has agreed a draft Budget to cope with the swingeing cuts imposed by the Government.

"That Budget removes 3.3% of my baseline in 2011-12 and allowing for a range of unavoidable pressures particularly on pay inflation and demography I have been faced with finding savings of over £300m per annum by the end of the Budget period. This will not be easy and will involve hard choices.

"I am pleased that the Executive managed to bring more money to the table and that the education allocation was increased from what was originally proposed.

"I will also be bidding for any additional money raised by the Executive when it is being allocated.

"Now I have published my proposals, I want to engage with all education stakeholders in order to hear their views and to build a sense of common purpose to face these challenges."

Job Losses

Meanwhile, as many as 4,000 jobs in the Health Service could be lost over four years as a result of the NI budget cuts, health officials have warned.

Yesterday, officials said they needed £5.4bn by 2015 - instead they are to get £4.6bn - a shortfall of £800m and it emerged that the elderly and the most vulnerable will be worst hit by stringent cuts after the Department's spending plans were published on Thursday.

Also this week, the Office of the First Minister and Deputy First Minister (OFMDFM) published its spending plans in line with the draft budget proposals for 2011-15.

First Minister Peter Robinson said: "OFMDFM is committed to its goal of growing the economy, tackling disadvantage and protecting the most vulnerable in society.

"The reduction of the block grant by the coalition government however means that this will be achieved with significantly reduced spending.

"The restructuring of the Department in 2010/11 has resulted in reduced annual operating costs for OFMDFM in the budget period of £0.95m.

"The Department will build on these efficiency savings by delivering a further 3% reduction in its operating costs. The budget for arms length bodies will also be the subject of a cumulative 3% per annum cost reduction."

Deputy First Minister Martin McGuinness said: "The creation of a social investment fund of £80m will specifically target the vulnerable and disadvantaged, while the creation of a Commissioner for Older People will create an important voice for the elderly. Regeneration activity will continue across a range of sites.

"These are difficult economic times and reaching agreement on the departmental plan has been challenging," he admitted.

Also yesterday, draft budget spending proposals and savings delivery plans for the Department for Regional Development (DRD) 2011-2015 were published.

Regional Development Minister Conor Murphy said: "With a 40% reduction in the Executive's overall capital funding from Treasury over the budget period, this has had a significant impact on the draft budget available to DRD for infrastructure investment and difficult choices have had to be considered as part of this process.

"Nevertheless the DRD draft budget has allocated almost £2bn to capital investment over the budget period.

"This includes over £1.1bn for roads, around £185m for public transport and over £665m for water and sewerage services."

The Minister for Agriculture and Rural Development, Michelle Gildernew also announced her Department's proposed allocations under the Executive's Budget.

"We will not have the resources to do everything we would want to do, and we are therefore taking action in a number of areas to balance our books going forward. We will optimise the contribution from the European Commission to our European Programmes.

"That will allow us to sustain the current level of farm land covered by agri-environment agreements – at 42%, this is the highest level ever achieved – and I aim to make a separate statement later this month about re-opening the Countryside Management Scheme.

"It will also allow us to sustain a high level of investment through capital grants which will total £28m of public expenditure across the Budget period," she said.

(BMcC/GK)