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 Context

Chris Heaton–Harris has announced the Northern Ireland’s budget with cuts in the Education, Justice, and Economy departments, while Health receives £7.3bn, similar to a 0.5% increase from last year’s budget allocation. These cuts are particularly biting in the context of an inflation rate of over 10% in Northern Ireland.

Heaton–Harris announced some welcome news that Stormont can repay back the budget overspend of £297 million from 2022–23 over a period of two years rather than one and that any Barnett consequentials this year could be used to repay the reserve claim.

Departmental Permanent Secretaries have been running NI’s nine departments since the DUP’s boycott in October with limited power due to there being no departmental ministers in place. When Stormont is operational, the ruling executive, and in particular the finance minister, are responsible for establishing departmental budgets; however, since there are no ministers, the responsibility falls on the Northern Ireland Secretary of State to set a budget, but it is the civil servants who decide how the funds are spent and, more contentiously, which services will be reduced. A task they are reluctant to complete. A senior civil servants’ union stated that any “exceptionally difficult decisions” regarding Stormont’s public budget should be made by politicians rather than civil officials.

Mr. Heaton–Harris’s budget has been described as “a punishment budget,” and only the people will suffer. Heaton–Harris has fought back against the accusations, stating the budget has been set to ensure services can continue in the absence of Stormont.

Departmental budgets:

Non–ring–fenced resource funding is as follows:

• Health: £7.3bn +0.5%
• Education: £2.6bn, –1.8%
• Justice: £1.2bn, –1.7%
• Economy £772m –1.7%
• Communities: £862m, –1.9%
• Agriculture: £579m, –1.4%
• Infrastructure: £523m +0.4%
• Executive Office: £182m, –3.8%
• Finance: £147m, –4.4%

The overall budget for capital projects is slightly higher at £2.24 billion.

What it means:

·        In real terms the education budget has been cut by around £330m and the health budget around £700m.

·        Half of the budget has been allocated to health; this is not unusual, with a slight increase from last year’s amount. However, the already under pressure department is facing high rates of inflation and outstanding pay demands. Given demographic pressures and some expenditures specific to the healthcare industry, the department will often function under the assumption that it requires an annual rise of 6% to remain constant. Health trusts have already made strides in finding ways to make savings, such as by cutting services like domiciliary care packages.

·        For education, a difficult decision will have to be made as they face a reduction of 2.5%, with speculation of an even higher percentage as schools and bodies like the Education Authority face rising costs in food, transport, and energy. The department has made cuts to schemes such as helping pupils from low–income backgrounds.

·        For the Department for the Economy, funding the Secretary of State specifically called out that that its budget includes £1.1 million for the Public Service Obligation route from City of Derry Airport to London.

Next Steps

• Heaton–Harris announced new legislation that will seek to extend the power of civil servants beyond their current expiration date of May 5. The Bill will also grant powers to allow the UK Government to explore with the NI Civil Service options for increasing budget sustainability, including further revenue raising. A leaked briefing paper from the Northern Ireland Office suggested that the introduction of water charges, increased tuition costs, and reintroduction of prescription drug chargers, may raise hundreds of millions of pounds.

Reaction:

• Alliance finance spokesperson Andrew Muir has described the budget as “absolutely brutal.”
• NIPSA NI’s biggest trade union has described the budget as “disgraceful,” and it won’t damage NI political parties but ordinary working people.
• The FDA Union National Officer for Scotland and Northern Ireland told BBC Radio Ulster that “it seems our fears were well founded.”
• Matthew O’Toole SDLP described the meeting with Chris Heaton–Harris as concerning and the budget as “a real squeeze on public services.” The SDLP proposed a triple lock to protect people and public services.