Government offers 'flexibility' on £300m overspend as it tables Stormont budget

Northern Ireland Secretary Chris Heaton-Harris, who has responsibility for setting the Stormont budget in the absence of devolved ministers in Belfast, outlined the funding plan for 2023/24 in a written ministerial statement at Westminster.

Devolution is currently in abeyance as a result of a DUP boycott of the institutions in protest at post-Brexit trading arrangements.

Civil servants who are currently running public services in Northern Ireland had been bracing themselves for a potentially brutal settlement.

One of the main causes of concern surrounded the need for Treasury to recoup a £297 million advance down-payment it offered to help bridge the financial gap in Stormont's finances last year.

It had been anticipated this would have been deducted from this year's block grant.

Mr Heaton-Harris said money would be drawn back in a different way, with the potential for it to be spread over two years.

He said it could be repaid using any future in-year funds allocated to Northern Ireland by the Government through the Barnett system process in 2023/24 and, if that was not enough to cover the cost, then the remainder could be recouped in the next financial year.

"With agreement from the Chief Secretary to the Treasury, flexibility has been granted on the repayment of the £297 million overspend from the 2022/23 Budget," Mr Heaton-Harris said.

"This will provide some protection to frontline public services in Northern Ireland from having to take the most severe reductions. However, difficult decisions remain in order to live within the funding available.

"To support this, I am committing any future in-year Barnett consequentials for 2023-24 to repaying the reserve claim.

"Should this not amount to £297 million, I will work with HM Treasury to reallocate funding from previously announced Northern Ireland funding packages, with the residual to be repaid in 2024-25."

As expected, the amounts allocated to the departments of health and education are broadly in line with the 2022/23 allocations.

Health will receive £7.3 billion and education will get £2.58 billion.

The departments of justice, finance and economy are among those facing reductions in their 2022/23 baselines.

The total non ring-fenced resource budget for day-to-day costs is £14.211 billion, down on the £14.269 billion baseline of 2022/23.

The overall budget for capital projects is up slightly to £2.24 billion from £2.05 billion in the last financial year.

Civil servants fear the allocations, which are essentially flat cash on the 2022/23 budget, will result in swingeing cuts to public services given the soaring inflation over the past 12 months and other additional pressures.

The arrangement on the £297 million overspend means that money that would ordinarily be distributed to Northern Ireland (and other devolved regions) as a consequence of policy decisions resulting in funding increases in England will be retained by the Treasury.

While Mr Heaton-Harris has distributed the block grant among the Stormont departments, he will not be taking spending decisions needed within individual departments to ensure they balance their books.

Stormont permanent secretaries insist they should not be placed in the position of having to impose significant budget-balancing cuts, potentially impacting the most vulnerable in society.

They contend such decisions should be taken by democratically elected politicians and have urged the Government to issue ministerial directions for any major cuts that are required.

But Mr Heaton-Harris has made clear he does not intend to issue such directions, which means the decisions will fall on the civil service until such time as powersharing returns to Stormont.

Civil servants have already been handed some extra powers to take decisions usually reserved for ministers and Mr Heaton-Harris also tabled legislation on Thursday that seeks to extend those powers beyond their current expiration date of June 5.

Mr Heaton-Harris is meeting the main parties at Hillsborough Castle on Thursday to discuss the budgetary picture.