Spending Review doesn't provide a foundation for economic recovery - Conor Murphy

Chancellor of the Exchequer Rishi Sunak preparing to deliver his one-year Spending Review in the House of Commons. Picture by Yui Mok/PA
Ryan McAleer

FINANCE Minister Conor Murphy has expressed disappointment over Chancellor Rishi Sunak's Spending Review, claiming that it doesn't provide a foundation for the north's economic recovery.

The Executive is in line for around £900 million from the Treasury after April 2021, but Mr Murphy said Stormont's everyday spending budget had effectively been frozen by the Chancellor, while the budget for capital projects will only rise marginally next year.

The bulk of yesterday's headline figure, some £538m, will be ring-fenced for coronavirus response in the next financial year, with another £380m allocated for ‘core' spending.

That extra money, allocated under the Barnett Formula, more or less replaces the extra £350m handed to the Executive under the New Decade New Approach (NDNA) deal to help restore Stormont in January.

That £350m was for one year only.

The Department of Finance said last night that it's resource DEL (departmental expenditure limit) budget for 2021/22 will be £11.596bn, just £40.9m more than the current year.

Resource DEL is the budget for the day-to-day running of Stormont's departments.

Stormont's total budget for capital spending will actually drop by around £23m next year to £1.652bn.

Rishi Sunak warned yesterday of lasting damage, with the UK economy shrinking by 11.3 per cent in 2020 and not recovering to pre-crisis levels until the end of 2022.

The Chancellor also indicated that next year will see record borrowing and a spike in unemployment.

The impact is likely to be worse in the north, where some economists have predicted a 15 per cent contraction in GDP even before the Executive announced the tougher two-week lockdown that comes into effect from tomorrow.

"Covid and Brexit create huge challenges for our economy and public services. In that context today's announcement is disappointing,” said Conor Murphy.

"The Executive's budget for everyday spending on public services stands still while capital investment needed to kick-start an economic recovery only increases marginally."

The Sinn Féin minister also criticised the freeze on public sector pay, warning it will have implications for the funding of pay awards here.

He also described as “unacceptable” the indication that London will control the Shared Prosperity Fund, intended to replace EU funding.

"Today's announcement does not deliver the funding we need to support the health service, public services, vulnerable people, businesses and workers," said the minister.

Managing director of the Construction Employers Federation, Mark Spence expressed surprise at the decision to leave Stormont's capital budget flat in 2021/22.

“It means the Executive must urgently focus on its capacity to deliver so many investment needs through the block grant alone,” he said.

“The Department for Infrastructure's capital funding allocation of £550m this year will, likely, be required to be replicated into next year – and that's without allocating an additional penny to NI Water which, on the face of it, needs to at least double its annual infrastructure spend for each of the next six years in order to make any tangible dent in its infrastructure deficit.

“While announcements today like a new UK infrastructure bank will grab the headlines – it is the practical realities of the funding available to the Northern Ireland Executive which needs to focus minds.”

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