And now the real work begins: Executive picks up budget baton from Sunak

28 October 2021 - by Gráinne Walsh

From Antrim’s boardwalk to Portrush’s recreation grounds the Dundonald International Ice Bowl and an old police station in Glengormley, there were many familiar local names in yesterday’s budget.

The regeneration of Daisyfield Community Sports Hub, the Omagh Health Centre and sports facilities in Castlederg are just three projects in the first tranche of projects supported by the Levelling Up Agenda, which was an important theme for Rishi Sunak’s first multiyear budget as we begin to recover from COVID-19.

In his initial response to the budget DUP East Antrim MP Sammy Wilson warned that snap reactions on the day a budget is published rarely age well. What we can be sure of however, is that the Chancellor had more to work with then many of us expected this time last year; that the devolved administrations will highlight the gap between budget day headline figures and the reality of financing public services and meeting the challenge of the ever-increasing cost of living.

With Conor Murphy set to share his perspective at planned events over the next couple of weeks, it will be interesting to hear how he plans to balance the clear aspiration of the Executive to deliver a suite of policy and investment initiatives with the reality of the fiscal envelope.  

One thing that we know is that he will not deviate from today’s message that the Spending Review creates significant challenges for our local public services. Specifically, he challenged claims of an additional £1.6bn per year for Executive departments, citing increases of an additional £450m, £670m and £866m for day-to-day spending when compared to the 2021/22 Budget. [1]

Framed by the Chancellor as the largest bloc grant since devolution, this three-year budget is to be welcomed in that it will enable better planning, something that Finance Minister Conor Murphy and the DUP Finance Spokesperson Sammy Wilson are agreed on. They are also united in their welcoming of changes to the APD tax on short haul flights as well as a recognition that low income working families face a cost-of-living crisis this winter.

In welcoming moves on Universal Credit Wilson, supported the principle of encouraging people to get into work but highlighted “the blatant unfairness of the high-Income Child Benefit Charge.  It is grossly unfair to those who are in employment. Two earners can earn £49k each and qualify for Child Benefit yet a household with one person earning £50,001 will not qualify. Whilst the basic rate tax threshold has risen, anomalies like this in the tax system need addressed.”

Economy Minister Gordon Lyons highlighted the UK-wide programmes that Northern Ireland will receive its share of, including the £5billion Project Gigabit, the £2.6billion UK Shared Prosperity Fund and the £1.4billion Global Britain Investment Fund, which he described as helping to “stimulate economic recovery and future prosperity.”

The UUP’s initial reaction was to focus on welfare issues, with Communities spokesperson Andy Allen giving a cautious welcome to the Universal Credit taper reduction while stating that this move shouldn’t “be allowed to mask the shameful previous decision to remove the £20 per week Universal Credit uplift.”

He went on to focus on fuel poverty, calling on Minister for Communities, Sinn Féin’s Deirdre Hargey, to immediately establish a Fuel Poverty Task Force to bring “meaningful long-term solutions to support those impacted by the increased cost of living and prevent many more individuals and families from falling into fuel poverty.”

The Alliance Party MP Stephen Farry described the budget as a missed opportunity on two counts - saying that a greater level of public spending “could and should be released to ease the pressure on households and to improve public services.” The second point of failure was insufficient investment in a green transformation, skills and job creation.”

Turning to the levelling up agenda, Farry highlighted the fact that “the new Shared Prosperity Fund centralising the spending power the Executive previously had through EU Structural Funds. This power grab undermines the Executive’s ability to target such resources directly to support locally-determined objectives.” 

Tweeting today the BBC NI Economics and Business Editor John Campbell provided excellent advice for those of us in the devolved nations watching the budget when he wrote: “listen to the stuff on tax & benefits; ignore basically everything on departmental spending & policies; treat the Barnett number with caution. Wait to see what the devolved finance ministry says later.”

As the budget process begins to crank up in advance of an announcement in December, it’s worth quoting Minister Murphy that the task now for us as an Executive is to make the best possible use of the limited resources available and work together to produce a Budget that brings down waiting lists on a sustainable basis.”

[1] The Department for Finance has helpfully shared its breakdown of core funding from the Spending Review which is as follows:

2022/23 - Non-ring-fenced Resource DEL £12.936bn / Capital £1.686bn / FTC £163m
2023/24 - Non ring-fenced Resource DEL £13.155bn / Capital £1.784bn / FTC £66m
2024/25 - Non ring-fenced Resource DEL £13.351bn / Capital £1.759bn / FTC £62m

They 2021-22 figures were helpfully provided for comparison - Non ring-fenced Resource DEL £12.485bn / Capital £1.611bn / FTC £74m