21/10/2010

Treasury Review 'Good Settlement'

The UK Treasury has been giving its 'official' version of the impact of the Spending Review on the Northern Ireland Executive.

In a statement it said it would reduce resource spending by 7% in real terms, and capital spending by 37% in real terms.

However, the Treasury said Northern Ireland is still on course to invest £18bn by 2017-18 as set out in its Investment Strategy and it will be for the Northern Ireland Executive to decide how to manage these reductions reflecting its own policies and priorities including its own programmes of greater efficiency and public sector reform.

The statement said that the Executive's settlement has been determined by the Barnett formula in the normal way, which provides the devolved administrations with a population-based share of comparable changes in the provision to UK departments.

Secretary of State for Northern Ireland, Owen Paterson said: "The UK is borrowing £270,000 per minute and this is clearly unsustainable.

"As part of the United Kingdom, Northern Ireland should play its part in tackling the record deficit we inherited from the previous Government.

"Considering the very difficult economic circumstances we have negotiated a very good settlement for Northern Ireland. Northern Ireland continues to receive the highest level of public spending per head in the UK - 25% above England.

"I am particularly pleased we have been able to honour our pledge to help secure a fair and just resolution of the PMS. The settlement will enable the Executive to help deliver the Government's deficit reduction plan in a fair and responsible way that protects the vulnerable and those who rely most heavily on public service.

"The Coalition Government will also continue to stand by Northern Ireland through our commitment to investment through the RRI and the stage II devolution deal on funding for policing and justice.

"In short we have fulfilled the Prime Minister's election pledge that Northern Ireland will continue to be funded according to its needs," he commented in the official statement.

It said the Northern Ireland Office's resource budget will be cut by 25% and that the Department will also commence a programme of work to develop shared services with the Scotland Office and Wales Office.

Like all parts of the UK, Northern Ireland is playing its part in bearing a share of the cuts that have to be made in order to reduce the record Budget deficit that the Coalition Government inherited, continued the statement.

However, the reduction in the Northern Ireland Executive’s budget is smaller than most UK Government departments and public spending per head remains higher than any other part of the UK, reflecting historic levels of spending provision.

Northern Ireland will benefit from decisions made by the Government, such as the Government's commitment to protect the health Budget in England.

Through the Barnett formula, this will have significant funding benefits for the Northern Ireland Executive including the welfare package, which will also help people in Northern Ireland into work.

The Government will lend the Northern Ireland Executive £200m a year to finance capital investment projects though the Reinvestment and Reform Initiative facility.

It is committed to delivering political stability including through ensuring policing and justice are well resourced. While these are now devolved functions, the Government is committed to the £800m package agreed by the previous Government and provided £12.9m on top of that earlier this year.

Also, as requested by the Northern Ireland Executive, the Government will provide funding for a £175m loan, and £25m to help finance an Access Fund, in order to ensure a just and fair solution for the Presbyterian Mutual Society (PMS) investors.

The Government, as announced in the budget, will also publish a consultation paper on rebalancing the Northern Ireland economy, in consultation with the Northern Ireland Executive.

(BMcC/KMcA)

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