Northern Ireland news

'Real risk' Stormont will overspend without budget in place Murphy warns UK Government

In a letter to Secretary of State Shailesh Vara and Chancellor Nadhim Zahawi, Finance Minister Conor Murphy said the lack of a budget has created is “a real risk” that government departments will significantly overspend this year. Picture by Hugh Russell.

FINANCE minister Conor Murphy has warned the British Government that Stormont is heading for a potential funding crisis unless an executive can be formed to agree a budget.

In a letter to Secretary of State Shailesh Vara and Chancellor Nadhim Zahawi on Monday, he states the lack of fiscal certainty and planning has created “a real risk” that government departments will significantly overspend this year.

Stormont has been without an executive since former DUP first minister Paul Givan resigned in February in a move linked to the party’s opposition to the Northern Ireland Protocol.

That left the executive unable to approve a draft three-year budget for 2022-25. Mr Murphy said the draft budget has no legal standing. He said an additional £435 million cannot be spent without executive approval.

The DUP has continued to block the formation of an executive since May’s assembly election, calling for progress on new legislation overriding parts of the protocol.

Despite the bill clearing the House of Commons, DUP leader Jeffrey Donaldson said on Friday that “more progress” is needed before the party ends its veto.

Stormont’s departments have been able to continue spending to a limited degree.

But Mr Murphy has told Nadhim Zahawi and Shailesh Vara that while legislative mechanisms allow civil servants to authorise spending, they do not provide departments with an agreed budget to plan.

He said ministers have been provided with “contingency planning envelopes” indicating the minimum level of funding they can reasonably expect to receive once an executive is in place. But he said those do not include “a significant level of funding available”.

“As the financial year progresses it is apparent that proceeding without a budget is becoming increasingly untenable,” he said.

Mr Murphy last week said inflation has reduced Stormont’s spending powers by an estimated £375m.

“As a result, there is a real risk that this will place the executive on a trajectory towards an overspend in terms of its resource DEL [day to day spending] limit; and the longer this situation persists, the more difficult and harmful it will be to reverse this course.”

Turning to the DUP, Conor Murphy’s letter states: “The DUP’s refusal to establish an executive has been used by the British government to justify the passing of the Protocol Bill through the House of Commons. As your government decides on its next steps in regard to its negotiating tactics with the EU it is important you are aware of the ongoing adverse consequences on the executive’s financial sustainability. I hope that your government will now ensure that the DUP reestablishes the executive so that we can agree a budget and begin to tackle the significant financial challenges we face."