Executive agrees budget cuts

Ministers have agreed to reduce public spending by £78 million after the Executive was unable to agree on the Welfare Reform Bill.

The changes were agreed as part of the June monitoring round. A £87 million penalty is due to be paid to the Treasury in the October monitoring round if no agreement is reached.

Health and education, which account for 62 per cent of spending, will be ringfenced with all other departments subject to a 2.1 per cent reduction. The Department of Justice has the largest non-ringfenced budget (£1.2 billion).

£90 million was reallocated from current to capital expenditure and an additional £20 million was allocated to the Health Service, much lower than the £160 million requested. Finance Minister Simon Hamilton said that the Department of Health, Social Services and Public Safety had been given more than three years to stabilise its budget “and in that context it was hugely disappointing that it then registered such a significant overspend.”

The block grant accounts for 93 per cent of the overall budget with the remainder coming from rates and borrowing. The current budget was agreed in March 2011 and expires in March 2015.

Alliance voted against the agreement with party leader David Ford claiming that it would cause an “inevitable crisis in public finances later this year”.

Under welfare reform, the social security budget would continue to increase in size (rather than be cut) but the increases would be lower than expected and eligibility for benefits restricted.