Public Expenditure: Draft Budget 2021-22

Part of Ministerial Statement – in the Northern Ireland Assembly at 6:00 pm on 18 January 2021.

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Photo of Conor Murphy Conor Murphy Sinn Féin 6:00, 18 January 2021

I wish to update the House on the Executive's agreement to a draft Budget for 2021-22. Members will know that the Executive cannot set their Budget without a funding envelope being set by the Treasury spending review. I had hoped that the Executive's Budget would be set last summer and would provide a multi-year settlement. That would have provided the Executive with sufficient time to reprioritise, plan and consult the public. However, the spending review outcome was not announced until 25 November 2020 and provides only a single-year Budget.

In those circumstances, I tabled a draft Budget for the Executive's meeting on 10 December that largely rolled over Departments' existing baselines for another year. Unfortunately, it was not until today that the paper was allowed onto the Executive's agenda for decision. That delay has further shortened the time available for consultation.

Excluding the funding provided for COVID-19, the spending review outcome provides a broadly flat-cash position for normal departmental spending, once one-off funding for public services in 2020-21 has been factored in. It is that spending review outcome that forms the basis of the draft Budget that I am announcing today.

The spending review has not delivered the support required to kick-start economic recovery in the context of COVID-19 and Brexit. The outcome reflects an effective flatlining of the 2020-21 Budget position. With increased demands on public services, and taking account of inflation, it will be a challenge merely to deliver existing services at their current levels. Make no mistake: the spending review outcome has led to very difficult Budget settlements for all Departments.

Of course, the Executive have the option to increase revenue through the regional rates. However, in recognition of the impact that COVID-19 has had on jobs and households, we are freezing the regional rate both for domestic and non-domestic customers. I call on councils to consider taking the same approach when setting their district rates.

Members will know that I am looking at how additional business rates support can be provided in 2021-22. In this difficult financial context, the Executive have prioritised allocations to continue welfare reform mitigations and to provide for Agenda for Change pay, which will support our health service staff. Those allocations reflect the priority that the Executive place on protecting the vulnerable and supporting our front-line health and social care staff, who have been at the coalface of the fight against the virus. We have also provided funding for pupils with special educational needs, reflecting that this is a crucial stage in young people’s lives. However, I recognise that, for most Departments, the draft Budget outcome represents a flat-cash settlement that will mean effective reductions once increased costs and demands on services are taken into account. Choices will have to be made, public services will have to be prioritised, and, if Ministers want to start new programmes, they may have to stop others.

I turn now to the capital budget. The draft Budget sets out some £1·75 billion of capital spending. It will help to deliver on the Executive’s flagship projects, including the A5, the A6 and the new mother and children’s hospital. Those capital allocations will enable investment in our infrastructure while supporting the construction sector. I can also announce that funding has been allocated to enable work finally to begin on Casement Park. More widely, the draft Budget will also help to deliver key capital projects that will encourage investment and drive our economy: for example, investment in water infrastructure and in the school estate. The level of funding provided also delivers on the NDNA priority to increase investment in social housing. That investment will help to address high levels of housing need and stimulate the construction sector.

People will want to know what provision we have made for dealing with the impact of COVID-19 into the next financial year. The spending review provided £538·2 million of funding for COVID support in 2021-22. That compares with £3 billion in the current financial year. The Executive have allocated £380 million to the Department of Health for the COVID-19 response and vaccine support; £30·6 million to the Department of Education to support families on low incomes through holiday hunger payments; and £700,000 to the Department for the Economy for higher education places following the uncertainty that surrounded the A-level results last summer. The £126·9 million balance of our COVID funding will be held for further consideration as part of the final Budget.

Due to legislative constraints, the Executive’s Budget is restricted to the amounts set out by the Secretary of State and notified to the Assembly in my written ministerial statement of 1 December 2020. Unfortunately, the Secretary of State failed to confirm a number of previously agreed financial packages, and, as a result, those cannot be formally allocated as part of the draft Budget. They include confidence and supply funding, city deals funding and New Decade, New Approach funding, and come to £254·4 million for 2021-22. I hope that the Secretary of State will confirm those important funds in time for them to be incorporated into a final Budget in the coming weeks.

The Secretary of State has also yet to provide funding for the victims' pension, which his Government designed and legislated for. Indeed, Mr Lewis has refused even to meet the First Minister, deputy First Minister, Justice Minister and me to discuss the funding of the victims' pension payments. The Executive are fully committed to delivering those payments, and, in line with the British Government’s statement of funding policy, it is the responsibility of the British Government to provide the necessary funding. I hope that the Secretary of State will meet with Ministers to discuss how the significant costs involved, which the Justice Minister has estimated might be as much as £800 million, will be funded.

As part of the Budget process, I am commencing a period of consultation to help the Executive to form a final Budget before the new financial year. As a result of the delay in the spending review, it is possible to allow only a short period for the consultation process, with replies due by 25 February 2021. Details of how to respond are available in the Budget document that accompanies this statement and on the Department of Finance website.

In conclusion, the Budget seeks to protect key public services in a very challenging financial context. I hope that this one-year Budget will act as a bridge to a multi-year Budget that allows the Executive to reprioritise their spending properly and plan for the longer term. I commend the draft Budget to the House.