Stormont officials look into spending cut options

By David Young, Press Association and Adam Evans

Stormont officials have commenced a scoping exercise to assess how looming spending cuts can be absorbed in the public sector.

It is understood the Department of Finance has asked the majority of Stormont departments to scenario plan for a 4%, 8% and 12% reduction in their resource budget for the coming two financial years.

The Department of Health has been exempted, as no health service cuts are envisaged in that area.

The exercise will not result in any final spending decisions in the short term, due to the ongoing absence of elected ministers amid the powersharing crisis.

The information will however be used to inform the formulation of future budgets, whether that be by a Stormont Executive or direct rule ministers.

As a result of decisions already taken by the Treasury, Stormont's resource budget will flat-line at around £10 billion over the next two years, which means a reduction in real terms when inflation is factored in.

Officials are scoping out how to free-up funds from within the current allocation to address pressures that will no doubt emerge in the 2018/19 and 2019/20 financial years.

The individual departments will now engage with their arms length bodies to establish what impact the three scenarios would have on service delivery.

For instance, the Department of Justice will ask the Police Service of Northern Ireland (PSNI) what effect a 4% to 12% budget cut would have.

In terms of money for capital projects, Northern Ireland will receive more from the Treasury in the coming years.

The budget is around £1 billion in this financial year, due to rise to £1.095 billion in 2018/19, £1.160 billion in 2019/20 and £1.230 billion in 2020/21.

In that context, departments are not being asked to assess the impact on cuts to their capital budget, rather outline what capital spends they envisage in the coming three years.

Given the prospect of future financial decisions having to be taken in Westminster if devolution is not restored, the Northern Ireland Office is being kept informed of the scoping exercise.