In March 2008, the Executive agreed to conduct a strategic stocktake of the expenditure plans of Northern Ireland Departments for the financial years 2009-10 and 2010-2011. The objective of that exercise was not to propose recommendations in respect of a reallocation of resources, but to set the context for subsequent in-year monitoring processes in light of emerging pressures and the expected level of available resources.
Following Executive discussion on 15 January 2009, I made a statement to the Assembly on 20 January on the outcome of the strategic stocktake exercise. In summary, the level of resources that are available to the Executive during the next two years is expected to be lower than when the Budget was agreed in January 2008. That reflects deterioration in the public-expenditure position of most industrialised economies. It means that emerging pressures can be accommodated only from a reduction in existing budgets, an increase in efficiency-savings targets for Departments, or the reduced requirements that are normally declared as part of the in-year monitoring process.
Although Departments have identified a broad range of issues in their response to the strategic stocktake, the two main issues that face the Executive in 2009-10 are the lost income from the deferral of the introduction of domestic water charges, and the cost of the Northern Ireland Civil Service equal pay claim.
Those pressures are also expected to have implications into 2010-11, when the Executive will be faced with the prospect of a reduction in the block grant from the Treasury as a result of the announcement in the pre-Budget report to increase the level of efficiency savings.
I am not quite sure what the Member means by “involved in the process”. If he is referring to the in-year monitoring exercises, those will follow the normal course of events and procedures. The Assembly Committees will be briefed on departmental responsibilities, and they will no doubt discuss those matters and interrogate officials and Ministers.
That is an important question and one to which we rightly return regularly when discussing these matters. It is important that we are not left with significant levels of underspend in Departments at the end of the financial year. All such money is returned to the Treasury, and, since easy access to end-year flexibility no longer exists, it is lost to the Executive. At a time of economic difficulties and pressures, particularly in the construction industry, it is important that that money is rolled out as planned.
Departments tell me that they intend to spend the capital investment allocations that they have been given, and I look forward to hearing about good progress in that regard. In 2007-08, reduced requirements and underpsend were £400 million in current and £334 million in capital. That is more than £700 million last year alone, which puts some of last week’s press headlines into context.
Given the huge changes in needs and available finance since last year, is the Minister not under a duty to the public and the Assembly to give more than a survey of the financial landscape? What answers is he providing to meet the needs of the present time?
The Member is aware of the situation from previous discussions, and he will no doubt have been briefed by his Minister, who agreed to this process in the Executive. Indeed, when this matter was mentioned at the Committee at which he was present on 2 April 2008, he raised no objections whatsoever, and he acquiesced.
This is a sensible overview of where things are likely to move over the next two years. It is clear that the real pressures concern the possibility of the pre-Budget report efficiencies from Whitehall, a pressure that will come to bear in 2010-11. In London, the Opposition and the Government are vying over who can make the greatest cuts to public expenditure rates of increase. Therefore, it will be difficult for Northern Ireland, other Whitehall departments and other devolved Administrations. In that context, I had a useful discussion last week with the Finance Ministers of Scotland and Wales in which we agreed a joint approach to the Treasury in relation to these important matters that impact on our Budgets.
Growing the economy was made the priority in the Programme for Government and the Budget, and that has been entirely vindicated and validated by events. Indeed, we have allocated over £1·5 billion in capital investment, which is 40% more than in 2006-07 and more than double the £670 million that was allocated in 2003-04. The building of schools, hospitals, houses and other major capital projects is proceeding, and £1·8 billion will be spent next year. That shows what the Executive are doing to help the economy.