Two days ago Finance Minister, Simon Hamilton MLA presented his draft budget. Writing exclusively for Slugger, he argues that in this budget he has done what is right for Northern Ireland
Constructing a Budget at any time is always a challenge. There is never enough money to spend on public services to meet all of the demands placed on government. Agreeing a Budget in the circumstances we find ourselves in Northern Ireland is even more difficult.
Our Budget has not been keeping pace with inflation with the block grant available to the Executive reduced by 1.6%. Add to that the well-publicised pressures in Health, Justice, Enterprise and other Departments, and a difficult job is made almost impossible.
Yet, in spite of these seemingly insurmountable challenges, the Executive has agreed this Draft Budget for 2015/2016. It is by no means an ideal Budget. The range of pressures we confronted required £872 million worth of reductions to our resource budget. Adjustments of that degree necessitates tough choices and difficult decisions. But the Executive has faced up to the harsh reality of our financial position and prioritised key public services like health, job creation, education and policing through £659 million of resource allocations.
Stripping a total off £213 million out of our day-to-day public spending will not be easy. I know that it will change the shape and nature of our public sector. In some instances Departments will have to cease delivering some services in low priority areas. Some have suggested that the Executive should have plugged this gap with local taxation rises. I believe this would have been a mistake, imperilling economic recovery and sapping consumer confidence. Water charges or higher rates bills would have to be paid from the pockets of people who are still struggling.
In many respects, by having to cut our cloth, Northern Ireland’s Government is merely mirroring what many households and businesses have had to go through in the last few years. Families across Northern Ireland have had to respond to rising costs or redundancies. Businesses have seen their markets disappear, have reduced their workforces and in the worst cases, have had to close the doors.
The context for this Budget – and indeed the next number of Budgets – is the outworking of the Conservative led Coalition Government’s austerity policy. The NI Executive’s spending power is approximately £1.5 billion lower in real terms next year compared to 2010. Office of Budget Responsibility projections indicate further tightening in UK public spending over the next three years which could result in as much as £1.3 billion being removed from the Executive’s budget. So, as well as being a Draft Budget that allows us to live within our means next year, it is also a Draft Budget that focuses on reform and reorganisation in readiness for the remainder of this decade. The £30 million Change Fund that I have established will allow Departments to develop and fund the up-front costs of innovative projects that involve cross-Departmental collaboration and prevention. A workforce restructuring plan which will involve a voluntary exit scheme is an appropriate response to a situation where we have less money, are providing fewer services and therefore do not need as many as 212,000 public sector workers to deliver them.
On the capital side of our Budget, we will spend £1.2 billion on infrastructure projects next year. Importantly, I was able to announce the creation of a new Northern Ireland Investment Fund. This Fund will use Executive resources to leverage in outside investment from international investors which in turn will be used to support infrastructure projects in social and affordable housing, energy production, energy efficiency, renewables and urban regeneration.
This Draft Budget offers the best way through what was always going to be a difficult year and starts to prepare us for the testing times that lie ahead.
It deals with our difficult circumstances in a way that is right for Northern Ireland’s economy, for our public services and for our infrastructure.
No one in my position would want to have to implement a budget that reduces public spending so drastically. Some Executive parties obviously viewed abstaining or voting against the Draft Budget as the easy option. That, in my view, was the irresponsible choice. Not only do those parties that failed to support the Draft Budget have to explain why but they must also outline what their viable alternative is and indicate what they would have done when the £100 million loan facility to help us through our in-year financial problems disappeared.
This is not a Draft Budget that is narrow or partisan or party political. It is about dealing competently with the circumstances we are in. When faced with tough choices, we have made the right choices and chosen the best interests of the people of Northern Ireland.