Aiken PR

The Briefing

NI Budget announced for 2018/19

by Aiken PR

08/03/2018

• Additional £25 million to be raised through rates (domestic and non–domestic)
• Increases/continuity for health and Education funding
• £410m of DUP–Con confidence and supply deal to be released
• This is a 1 year budget

the NI budget for 2018/19 has been released with headlines focusing on above inflation rate rise of 4.5% (1.5% non–domestic) and commitments to seek to maintain front line services.  The DUP’s Confidence & Supply £410M download is expected to see major infrastructural commitments taken forward.  See below.

  • Additional £25 million to be raised through rates (domestic 4.5% and non–domestic 1.5%)
  • Increases/continuity for health and education funding
  • £410m of DUP–Con confidence and supply deal to be released
  • This is a 1 year budget

Increasing university fees, re–introducing prescription charges and ending free travel for 60–64–year–olds were all under consideration. They are now be–revisited in the next budget for 2019/20.

NI Budget 2018/19

The Secretary of State has today announced a budget which she says ‘provides the clarity needed to allow departments to plan for the incoming financial year’.

Context

The Department of Finance published a briefing document on the Northern Ireland Budgetary Outlook in December which illustrated the choices that might need to be made to set a budget.

The feedback on that Briefing has been considered and departments have worked with the Department of Finance and the NIO to identify what decisions and steps might be required to deliver a budget for 2018–19 that would address the key pressures in public services, particularly in health and education.

Additional short–term financial subsidy

The budget is supported by revenue–raising and flexibilities from the UK Government. This includes £25million generated by increasing the regional rate, and a decision to allow £100million of existing funding (normally ring–fenced for capital) to be invested in ongoing public service provision, enabling departments to further protect and preserve key services.

Key points

This Budget will:

  • provide an increase for the Department of Health compared to the comparable actual funding levels in 2017/18, although given that cost pressures are increasing at a greater rate, difficult challenges in meeting demand remain;
  • maintain schools budgets at 2017–18 levels in cash terms, as well as ensuring that other services to schools, some specific initiatives and youth services can continue to be provided. It will also ensure there are sufficient funded pre–school places to meet the demand for all 3–4 year old children in Northern Ireland as well as funding support for deprived communities through initiatives such as Sure Start and the Pathway Fund;
  • provide funding for the Tackling Rural Poverty and Social Isolation programme as well as maintaining funding for vital services which provide significant value to rural communities and wider environmental benefits; and 
  • enable full funding for street lighting and traffic signals together with provision for a limited routine roads maintenance service including the repair of large potholes. It will also enable the continuance of existing public transport services and ensure minimal risk of water outage events and adverse environmental impacts.

Confidence & Supply DUP–Con deal (£410 investment)

Through the financial annex to the Confidence and Supply Agreement, £100million will be invested to progress health transformation; £20million will be invested in severe deprivation programmes, £10million in mental health services and £80million in health and education pressures.

Confidence & Supply (Infrastructure)

The overall capital budget will deliver the flagship projects identified by the previous Executive as well as funding existing contractual commitments, health and safety requirements and a number of other projects. £200million for infrastructure from the Confidence and Supply Agreement is expected to support the development of key projects including the York Street Interchange project ahead of the construction phase.

Conclusion

This Budget has involved a number of difficult decisions for Departments and substantial savings have been identified that will need to be implemented in the course of 2018/19. Some funding streams will not receive budgetary uplifts and indeed will have to be reduced, with savings plans and cost controls being implemented across the NICS departments and in arm’s length bodies. The focus will however be on protecting front line service provision as far as possible.

Now that Departments have certainty about their funding position for 2018/19, further budgetary planning and analysis will be taken forward to develop and implement detailed spending plans. The Budget will be enacted in legislation in due course. The Budget will also be monitored closely throughout the year with resources reallocated to highest priority areas in the usual way.

*1 year timespan

Given current circumstances, this is a budget for 2018/19 only and therefore does not provide the much needed clarity and strategic direction for the future. Preparatory work for 2019/20 and beyond will be taken forward over the coming months and further strategic decisions will need to be made to ensure that a budget is in place in good time before 2019/20 and to make departments’ financial positions sustainable. 

Appendix 1 (Karen Bradley, SOSNI)

  • On the resource side, it delivers real–terms increases for health and education from their 2017/18 opening baseline. It also delivers cash terms increases for the Departments of Justice; Infrastructure; and Agriculture, Environment and Rural Affairs. Elsewhere departments would either be cash–flat or see small decreases, with notable reductions only for the two central departments (Finance and the Executive Office). For capital, it provides a strong basis for investment and enables key flagship projects to progress.
  • This settlement also delivers £410m in financial support arising from the financial annex to the Confidence and Supply Agreement between the Conservative Party and the Democratic Unionist Party.
  • As part of setting a budget, it is essential that the UK Government provides clarity on the regional rate. This budget position has been constructed on the basis of an increase in the domestic regional rate of 4.5%. I consider that this is a necessary and important step to continue to support public services, particularly in health and education. The non–domestic rates would rise only at 1.5%, in line with inflation. Conscious of the interest of many stakeholders in the scheme, I can also confirm that this budget settlement would provide the basis for the Small Business Rate Relief to continue.
  • Permanent Secretaries cannot, of course, take the full range of decisions that would be available to Ministers. In that context, the UK Government shall continue to support the Northern Ireland administration, and to do whatever is necessary to meet our responsibilities to the people of Northern Ireland.

Political Reaction

DUP leader Arlene Foster welcomed the inclusion of the £410m from the confidence and supply agreement.

“Cynics doubted the confidence and supply money would ever be delivered, but today it has helped achieve an improved budget compared to the one that many feared,” she said.

“Our efforts will help alleviate pressures in health and education, tackle issues with mental health and deprivation, transform our NHS and build new infrastructure.”

Sinn Féin Vice–President Michelle O’Neill called for a British–Irish Intergovernmental conference to pave the way for power–sharing to be restored.

“This is a disappointing budget which doesn’t provide the resources needed for the public services our people need and deserve,” she said.

“It’s not good for householders, for victims, for health, for our economy, our colleges or the homeless.”