October Monitoring: Every Little Bit helps?

Autumn brings not just darker skies but a small relief to NI government. £54m of unspent money across the NI government system has now been reallocated to other areas of current spending. As in previous Monitoring Rounds, the bulk, £40m, goes to health with some for schools and then small amounts for Infrastructure and the economy.

None of this is very surprising:

  • The Department of Health will continue to face a funding gap in the rest of the financial year- now £30m instead of £70m. So, expect some difficult cuts.
  • The re-allocation of underspends represents a temporary help only because recurrent or “baseline” allocations to the Departments remain unchanged.
  • Previous Programmes for Government stressed the economy being the Executive’s priority. Interestingly, in this Monitoring Round the bulk of the money is Departments other than the Economy.
  • As was implied recently when it was noted that the NI Departments in total faced £1bn of funding pressures, the entire government system remains fiscally challenged in a very fundamental sense. There are limited options facing policy makers (whether they be devolved or direct rule)- cut spending, increase taxes/revenues, borrow or introduce radical reform of the way public services are delivered. None of these options is straightforward but, as the recent figures have suggested, the longer difficult decisions are delayed the harder they ultimately become.
  • Expect an overall Budget for 2017-18 to probably be produced by the end of this month. As in this Monitoring Exercise the emphasis will be on the two highest spending Departments- Health and Education. They will get the largest share and the bulk of any increased allocation. If the Secretary of State has to stand in for Stormont he is likely to be making his best guess of what a Stormont Finance Minister would have done. So, we are not likely to see any radical approaches.