NORTHERN IRELAND could face budget cutbacks of over £2 billion over the next four years as a result of the British’s government’s forthcoming spending review, the Minister of Finance Sammy Wilson (DUP) has warned.
Mr Wilson said that Northern Executive Ministers must quickly plan for what the cuts will mean for their departments and that it wasn’t realistic that British chancellor George Osborne would accept any special pleading when announcing his spending review on October 20th.
Mr Wilson said that while it wasn’t clear by how much exactly the British treasury block grant would be reduced, it could total over £2 billion by the financial year 2014-2015.
He estimated that there would be cuts in the current allocation of £430 million in the next financial year, and that this would rise to £780 million in the following year, to £1,170 million in the year after that, and to £1,560 million in the fourth year.
On top of the reduction in current expenditure there would be an estimated reduction in the capital allocation over the next four years from £1.7 billion to £500 billion, bringing the total cutback to £2.06 billion.
If, as the British government is indicating, there are also cuts in social welfare payments, which are paid from the British treasury and are not managed by the Northern Executive, then there could be an additional reduction of up to £1 billion annually in money circulating in Northern Ireland.
Mr Wilson acknowledged that the budget reduction would lead to job cuts but refused to predict how many jobs might be lost.
However, University of Ulster economist Prof John Simpson said that applying a Scottish Assembly formula – of £58,000 in allocation reduction equating to one lost job – that overall job losses could be up to 40,000. But he said that if the cutbacks mainly came from a public-sector pay freeze, the job losses could be far less.
Mr Wilson said there would be no sympathy in Whitehall with the argument that because “Northern Ireland was such a basket case that it should be exempt” from cuts.
He also disclosed that, apart from DUP Ministers, there was resistance in the Executive to the need for planning for the cutbacks. He said a request for suggestions about where savings could be made had only elicited responses from DUP Ministers.
Mr Wilson said it could become “fairly messy” when the Executive had to agree where the cuts should be made and that cutbacks would be “fairly massive” for some departments. Some Ministers had been “plundering and blundering along” and it was now time for tough decisions, he said.