Draft Budget

 An overview of the draft Budget’s main points.

It was an “invidious task”, according to Sammy Wilson, to manage a “significant real terms decrease” in funding. However, a “slash and burn” policy “would not have been in the interests of the people of Northern Ireland.”

Covering 2011-2015, the draft Budget is out for consultation until 9 February, therefore allowing for a final Budget that month. In keeping with the times, those responding will not receive acknowledgement letters.

While most parties condemn the Coalition Government for spending cuts, the Budget quietly acknowledges its commitment to a regionally balanced UK economy and the promised paper on corporation tax and reforming the local economy. It also warns of depressed demand due to the Republic’s financial crisis.

The Budget’s economic outlook suggests a decade of missed opportunity in living standards. Although gross value added (GVA) grew by an annual average of 5.5 per cent up to 2009, GVA per capita stayed fairly constant and is still just under 80 per cent of the UK average. A consultation on the priorities for a draft economic strategy will start “shortly”.

The major policy changes are:

• Raising the domestic regional rate in line with inflation;

• A two-year pay freeze for civil servants earning over £21,000;

• A review of all quangos (with a final decision in May);

• Ring-fenced Health Service and PSNI spending.

Inflation-linked increases in the business regional rate, a 30 per cent cap on manufacturing rates, and the ‘no water charges’ policy remain in place. The plastic bag tax (expected to raise £4 million) receives a green light and more revenue raisers may be included in the final version.

Each department gets a headline figure for capital or resource spending but must publish its own draft savings delivery plans during the consultation. Each Minister is therefore responsible for drawing up cuts within their own departments.

agendaNi’s analysis for current expenditure compares 2010-2011 figures with next year and 2014-2015. Overall, this type of spending is initially cut but then increases year-on-year.

Education takes the largest numerical cut (£67.1 million), rounding off an already troubled term for the sector. This is followed closely by the same category for regional development (£63.3 million). The extra DHSSPS spending comes to £326.3 million.

Capital figures are based on expected net receipts and are therefore less predictable. Overall spend is due to drop but new receipts are expected from levying housing association reserves (£20 million per year) and the Belfast Harbour Commissioners (£35 million per year), with a further £540 million dependent on land and property sales.

A new ‘social investment fund’ for interface areas (£20 million per year) will be run by OFMDFM. The ‘social protection fund’ (initially £20 million) will assist the wider community and bears similarities to the hardship payments announced in December 2008.

Support for Presbyterian Mutual Society savers is re-affirmed. The Green New Deal is described as an “ambitious investment programme” but will receive £4 million per year, well short of the £121 million sought by the Green New Deal Group.

The cost of division is not mentioned, with good relations described as desirable. Equality between separate groups in society is seen as more important. Responding to Anna Lo, the Finance Minister said that division had been considered and a “huge debate” was needed, especially after Peter Robinson’s comments on segregated education.

An additional £1.6 billion was found to offset the severity of the British Tory Government’s cutbacks.
Mitchel McLaughlin (SF)

There should no euphoria regarding this draft Budget. It is late, and some painful and challenging times lie ahead.
Stephen Farry (Alliance)

Agreeing a budget is necessary to give certainty to all Executive departments and associated bodies, to the economy and the general public.
David McNarry (UUP)

Reducing the consumption power of public servants means that more shopworkers are at risk, while reductions in capital investment means that few builders will get back to work, despite the welcome but too modest allocation of £4 million to the Green New Deal.
Peter Bunting (ICTU)

Many of the better elements of this budget are reflective of SDLP ideas.
Margaret Ritchie (SDLP)

We accept that business needs to pay its part and we believe, despite the tough trading environment, that a 2.7 per cent increase in rates is acceptable as part of the overall budget settlement.
Terence Brannigan (CBI)

The Green New Deal benefits both the local community and the local environment.
Steven Agnew (Green)