Northern Ireland facing a £660 million black hole in public finances amid cost-of-living crisis, Stormont Finance Minister Conor Murphy warns
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Finance Minister Conor Murphy, in a written statement to the Assembly, warned that the spending pressures mean a pay award for public sector staff is "unaffordable".
The warning comes amid widespread industrial discontent in the public sector - along with the private sector - as trade unions demand pay rises that match or exceed the rate of inflation.
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The dire state of Stormont finances now raise the prospect of cuts as ministers are forced to try and balance the books.
A spokesperson for Mr Murphy's department said: "Departments’ forecasts of their resource expenditure for the financial year show a collective overspend of some £960 million. Against this there is £300 million of funding available for allocation.
"Should the current trajectory continue the block grant would be breached which under the statement of funding policy would mean any overspend could be taken from next year’s budget, which is already under huge strain."
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Mr Murphy, in a statement, said: "With no budget to help Departments plan, the Westminster Government’s mini-budget not providing additional money for public services, and inflationary pressures, our finances are now in a critical position.
“While I appreciate it is hugely challenging for Departments to operate in the absence of a Budget, as Ministers we have a collective responsibility to ensure that we live within the Block Grant. I have written to Ministers reminding them of the importance of ensuring spending remains within the overall budget provided to us. This is crucial, as any overspend may be taken from next year’s Budget – making an already difficult financial position much worse."
The soaring energy prices since Russia launched its invasion of Ukraine and plunged Europe into an energy crisis mean the cost of heating public facilities such as hospitals and schools has also gone up.
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Hide AdMr Murphy has now confirmed that rising energy prices have hit the public purse hard.
The Finance Minister, in his written statement, said "energy cost pressures" alone account for around a quarter-of-a-billion of extra spending.
"The recent spending forecast from departments included some £250 million of energy cost pressures," he said.
"While the Chancellor announced that the public sector would be included in energy bills support, the lack of detail in this announcement has made it
difficult to calculate the impact this will have here.
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Hide Ad"Individual departments will have to assess the impact on their own spending, but at this stage I anticipate this support will fall far short of the £250 million energy costs identified to date."
On the need for public sector pay rises to help workers cope with the cost-of-living crisis, Mr Murphy said: "Given the current cost of living crisis I consider it vital that a pay award be provided for public sector staff.
"Unfortunately, the latest spending forecast provided by departments would indicate that such a pay award is unaffordable.”