Stormont: Departments set to face large cuts to their budgets

Stormont departments are facing large cuts in the new financial year, Northern's Ireland budget watchdog has confirmed.

The NI Fiscal Council says departmental spending is set to fall by 6.4% in real terms in 2023/24.

It will then increase by 1.9% in 2024/25.

The council says this "dramatic" v-shaped spending profile is not conducive to planning service delivery.

Last month the BBC reported that Stormont officials were planning for budget cuts of at least £500m in cash terms.

A major reason for next year's tough budget is an overspend in the current financial year, which was due to energy costs, pay claims and weakened oversight.

To tackle the overspend Stormont had to take what was in effect a £300m loan from the Treasury.

Under public spending rules that will have to be repaid in full in the new financial year rather than being paid down over a number of years.

The Fiscal Council has warned that there is a risk that an overspend could be repeated in the new financial year, not least because a formal budget is not in place as that financial year begins.

With little prospect of devolved government returning in the short term it will likely be down to the NI secretary of state to set the spending totals for each department.

Chris Heaton Harris briefed the local parties last week but has yet to set a date for bringing forward a budget.

A change to the usual rules means he has been given more leeway to delay setting a budget.

Normally, Stormont departments can spend up to 45% of their previous year's budget without a new legal authorisation but in the new financial year that has been increased to 65%.

Sir Robert Chote, Chair of the NI Fiscal Council, said: "As 2022-23 draws to a close, NI departments face the coming financial year with no ministerial leadership, no agreed budget allocations to work from and a tough financial environment.

"Whoever eventually undertakes the task of setting next year's budget - the Secretary of State or a restored Executive - will face some difficult decisions."

In a statement on Tuesday Mr Heaton-Harris said: "Today's report demonstrates how years of financial mismanagement have left Northern Ireland's finances on an unsustainable footing.

"We have already made clear that the 2023-24 Budget will be extremely challenging. If the absence of an Executive continues, the UK Government will work at pace to deliver a balanced and affordable budget for the year ahead."