£131m extra funding welcome but this represents an increase of only about 1%. A stop-gap until either devolution back or Westminster makes budget
The Secretary of State on Wednesday announced an allocation of an extra £131m of funding for the Northern Ireland government departments.
This will be welcomed in terms of easing various cost and spending pressures but needs to be placed in the perspective of the total Northern Ireland budget (current and capital spending combined) of about £12,000m. Today’s extra money therefore represents an addition of just over 1%.
Given that devolution is currently not operating and the inter-Party talks are in abeyance, the Secretary of State has stepped in so as to ensure the monies released by departmental under-spends are not lost to the system (the Monitoring Round exercise). He had also allocated £42m which was provided as a Barnett consequential as a result of the Chancellor March 2017 Budget.
Of the extra money, most goes to the two largest spending departments- £90m to health and £30m to education. These two departments are probably the most vocal in highlighting the alleged difficulties produced by perceived “austerity”. If a devolved Executive had still been in place it would probably have acted similarly and placed most money with schools and hospitals.
The Secretary of State probably wants to preserve as much continuity as possible in the hope that come the Autumn a revived Executive will be back in place. However, if devolution fails to return at some point Westminster is likely to legislate to apply a full Budget for 2017-18. Time will tell if we do return to Direct Rule whether the budgetary policies which will then be pursued will be similar to those adopted during 2007-2016 or could we see government strike out in new and radical directions; new or increased taxes and charges, a spending allocation which really prioritized economic growth more than health funding.
Today’s funding announcement is separate from the Conservative-DUP deal.