Murphy warns departments could have run out of money

THE Finance Minister warned that Stormont departments could have run out of money next month as a result of extra spending due to the Covid-19 pandemic.

Last night, MLAS backed Conor Murphy’s bid to fast-track a budget bill through the Assembly to give the under-pressure departments the ability to keep spending.

The Executive has already allocated an additional £1.2bn in response to the crisis, but Mr Murphy said some departments are spending more than they can afford.

Speaking before the Assembly yesterday, he said: “Our analysis suggests that at least five departments may run out of cash before July 31, 2020, and this is the date when a budget bill would normally be expected to receive Royal Assent.

“One department may reach that limit as early as June 19.”

Mr Murphy said if the Department of Finance was to follow the usual budget timeline, departments would simply run out of money before final budget estimates can be approved.

In order to avoid this scenario, the minister yesterday brought forward a motion — backed by MLAS later — to allow departments to continue to spend money until detailed budget estimates can be debated later in the year.

Earlier, he said in other areas departments are spending less money than anticipated, such as on capital projects where building work has stopped”.

He added: “We have also asked departments to undertake a reprioritisation exercise to let us know monies that they aren’t spending so that we can collectively, as an Executive, have a look at that and make sure the recovery plan we intend to put in place, that we will be discussing this week, will have resource to go along with it.”

One department under increasing financial pressure is the Department for Infrastructure, in particular NI Water.

Earlier, Infrastructure Minister Nichola Mallon said the water and sewerage provider is facing a “funding crisis” as a direct result of the Covid-19 pandemic.

“NI Water provides vital services across Northern Ireland and ensuring that is financially supported is not only vital to NI Water’s future, but it is critical for protecting our communities,” she said.

“It’s important to look at the facts. Firstly, businesses have closed due to the Covid-19 restrictions, leading to a funding gap in NI Water of £30m.

“Secondly, despite the fall in business use, demand for water has increased overall during lockdown, as we are using more water at home. Sewer blockages have also increased with more wet wipes being flushed down drains and NI Water has also had to change its working practices to keep frontline workers safe. All of this means they are incurring extra costs.”

Ms Mallon added that NI Water has been unable to avail of the business support provided to private business by the Government due to the coronavirus pandemic.

NI Water was already facing financial difficulties, warning in January it needs at least £2.5bn to continue providing essential services.