Stormont Executive publishes draft budget
Jon Morris
03 April 2024
Ministers announce budget at Stormont
Castle.
The publication of a draft budget by the Stormont Executive has exposed the threadbare nature of the financial package that accompanied the restoration of the devolved institutions back in February of this year. That package, which had a headline figure of £3.3bn, was trumpeted as a major win for local parties that would enable the Executive to get onto a firmer footing and address many of the problems that were accumulating within public services. It was agreed that the health service, given its dire state, would be made a priority.
The new draft budget, which actually reduces the funding going to health in the next year, completely punctures such assumptions. However, it should not really have come as a surprise. The more the financial package came under examination the less there was to it. The headline figure of £3.3bn was not going to be enough to restore public service levels to what they had previously been, let alone bring them to a level required to address need. It is also the case that around a third of the package was to cover spending in previous years. One retrospective element was the £685 million allocated to settle public sector pay claims for the financial year 23/24. Another is the offer by the British Treasury to write off a £560 million overspend. This is not automatic but conditional on the Executive raising £113m in additional revenue. When all of this is factored in, the funding available for public services in Northern Ireland, will continue to decline in real terms. With high levels of inflation, that decline over recent years, has been dramatic. According to the Department of Finance the current funding of public services is £2.3 billion lower than what would be required to maintain the same level of services as in 2021-22.
This was the background to the warnings that were coming from ministers and officials in the run up to the publication of the draft budget. The finance director at the Department of Health set the tone when she appeared before MLAs. "It is fair to say the financial position for health has never been so tough," Brigitte Worth said. She outlined a looming funding gap of up £1bn for the new financial year. While part of this is down to inflation; she said the service needed an extra £400m a year just to stand still. Richard Pengelly, chief executive of the Education Authority, which delivers all education services in the North, said he expected the budget to be “incredibly difficult”. The “brutal reality” was that that education was not going to get the funding settlement that it needed in terms of service provision. In a briefing to the finance committee the minister Caoimhe Archibald revealed that she had received resourcing bids from ministers which were more than three times the available budget. This represented a shortfall of around £2 billion.
The actual draft budget was completely in line with these forecasts. The Stormont Executive agreed a spending plan for the financial year, with about £14.5bn for day-to-day spending and about £1.8bn for capital spending. The £14.5bn represented a 6.8% (£925 million) uplift on the budget set by the Secretary of State at the outset of the 2023/24 financial year. The headline of this is that the restored Executive added £1billion to the budget. However, this is misleading as it ignores the hundreds of millions of pounds of emergency funding that was pumped into the health service towards the end of 2023. When taken into account the uplift is less than claimed. This is a stand still budget at best. For some departments, most notably health, it is a cuts budget. The health service, which was claimed to be a priority for the new Executive, is having its funding reduced by 2.3% (not the claimed rise of 7%). The £187m (2.3%) less that it will receive in the current financial year means a reduction of almost 150 acute hospital beds, the reduction of 1.1 million hours of domiciliary care or the reduction of 500 care home beds. While £34m has been set aside to tackle waiting lists, which are the worst in terms of numbers and times of all the UK regions, the impact will be minimal. Health Minister Robin Swann has warned that the budget will put people “at increased risk of harm".
The water and sewage system is facing another annual shortfall of nearly £100m with implications for housing and development. Work to address the environmental catastrophe of Lough Neagh has been delayed. The £25m provided for childcare amounts to about 6% of the £400m that the education minister previously said would be needed to fully fund a childcare and early learning strategy. Public sector pay claims have only been partly resolved. Pay parity has not been restored and with this funding only being a one-off payment, awards in subsequent years are likely to revert back to 0% or below inflation.
The leaders of the Executive talk about “tough decisions” and “priorities” but these are just bywords for austerity that could just as easily come out of the mouth of any Tory minister. With most of the £3.3bn financial package already allocated the funding of public services is likely to deteriorate even further. This could be partly offset if the Executive made use of the property taxes at their disposal - lifting the gap on the regional rate or doing away with industrial derating - but they have already ruled this out. Revenue raising measures are rejected on the claim that this would hurt people already struggling with a cost-of-living crisis. The assumption is that everyone is in the same boat but that ignores the fact that wealthy individuals and businesses based in Northern Ireland are paying a relatively low level of taxation. When the Executive rules out the use of the mildly progressive tax powers it has, it is not protecting the poor but featherbedding the rich.
The draft budget exposes yet again the dysfunctional nature of the Executive. It is not a government in any meaningful sense. It doesn’t even have a Programme for Government. The various ministers are allocated funding to pursue their own agendas. The Executive is no more than a mechanism for the distribution of community patronage. This can’t change because it is the foundation and dynamic of the political settlement that brought the devolved institutions into existence
This poses a problem for
a trade union leadership that has completely bought into the proposition
that Stormont can be a vehicle for social reform. The additional
funding for pay claims may provide a short period of relief but it won’t
undo the general trend in austerity. It won’t reverse the shift towards
regionalisation that has seen a significant decline in levels of pay and
public provisions. Rather than shielding workers it has been
workers who have made sacrifices for the sake of bringing Stormont back
and keeping it going.