Budget constraints will be ‘incredibly challenging’, permanent secretary warns

The Northern Ireland budget for 2023/24 will be “incredibly challenging” and may lead to a decrease in the quality of public services, a permanent secretary for the region has said.

Neil Gibson, the permanent secretary for the Department of Finance, held a press conference after Secretary of State Chris Heaton-Harris announced a budget that maintains a level of funding for Northern Ireland similar to last year, but which is expected to see a real-terms cuts to services because of high inflation.

In the absence of a Stormont executive, permanent secretaries like Mr Gibson have to make decisions regarding allocation of the budget that are usually undertaken by elected ministers.

The Northern Ireland powersharing assembly and executive is suspended due to the DUP’s protest over post-Brexit trading agreements.

Mr Gibson said he and his colleagues will have to choose the “least harmful course” in allocating the available funding.

“Firstly, it’s extremely welcomed that we have a budget that gives a level of certainty,” he said.

“We can now, myself and my permanent secretary colleagues, can make some plans and can look ahead at the sorts of decisions that will need to be taken to live within the budget that has been set.

“The budget in broad terms suggests that we need to deliver public services in Northern Ireland for roughly the same amount of money this year as we did last year, but I think as everyone listening will recognise, that’s incredibly challenging.

“We’re facing very significant rising costs, we have more pressure on our public services, so for myself and all of my colleagues, we’re really getting stuck into the hard work now of trying to plot the least harmful course, that we come through the challenging times ahead as we work out how we meet the figures that have been published today.”

Mr Gibson said the budget was slightly better than he had feared, but that any future money coming into Northern Ireland would first be directed towards paying back the £297 million overspend from last year.

“In one way it’s little bit better than I had personally feared.

“There is a level of spending that we incurred last year, about £300 million, that we still owe effectively back to Treasury, and we haven’t been required to pay that back at the beginning of this year, now that helps a little bit with the starting position.

“But although a little bit complex, the way it works, it means that if any future money was to come into Northern Ireland during this year, we would have to pay that, effectively that loan back first out of that, so that might create, and probably will create, some challenges during the year.

“But it is fair to say that that is a little bit better of a starting position than I personally have feared that we might have been in based on the numbers we’ve been provided up to this point.”

Public sector workers such as teachers, civil servants and healthcare professionals have all been on strike at various points in recent weeks over pay disputes.

Mr Gibson said the constraints of the budget will likely mean a decrease in the quality of public services.

“Unfortunately, it does mean that we can expect some decrease in the quality or the quantum of services that we’re able to deliver, but of course, it’s our job to try and find the least harmful way of doing that,” he said.

Mr Gibson said the financial situation in Northern Ireland is one “we haven’t been in before”, adding: “Speaking to many of my colleagues, they would certainly have articulated to me that they don’t recognise a position quite as difficult as this one because it’s coming at a very unique time.

“Not only have we this pressure on the cash available, but we have these rising costs and pressures.

“We haven’t had inflation like the level that we have now for a generation, longer than that in fact, so facing those rising pressures with a budget that’s effectively standing still, puts them, puts us all in a position that we haven’t been in before.”

Mr Gibson also said that elected ministers should be the ones making budget decisions, not unelected permanent secretaries.

“It’s never a position that public servants wish to be in in terms of actually having to make some of these decisions and choices, it would be always preference, it should always be the case that elected officials should be in the position to make those choices and decisions,” he added.