Civil servant holds purse strings as NI Budget crisis looms
THE failure to form a new Executive has resulted in an unprecedented Budget crisis, according to a senior Stormont source.
Among the first casualties in the aftermath of the deadline passing without agreement are rates bills, which are now scheduled to go out a month late.
The failure to agree a Budget before the collapse of Stormont in January, and the parties’ failure to form a new Executive following the snap election earlier this month, means a senior civil servant has been left holding Stormont’s purse strings.
Amid the political vacuum and the absence of a Budget, Department of Finance Permanent Secretary David Sterling will use powers under Section 59 of the Northern Ireland Act 1998 to release cash and resources to departments from April 2017 until a new administration is in place.
He can draw down 75% of Northern Ireland’s block grant by the end of July and 95% by December in the interim.
A plan is in place to get through the next few months, although a Government source warned the longer we go without a Budget, the more difficult things are likely to get.
It has been described as an “interim measure” and “no replacement for a Budget.”
The source added: “It shouldn’t be down to civil servants to make allocations.”
Despite previous crises at Stormont, Section 59 has never been triggered before. Nor have any equivalent powers been used in any devolved region of the UK. If an Executive cannot be formed, the House of Commons may have to pass a Budget for here.
As the stalemate between the DUP and Sinn Fein continues, all departments are set to receive a letter from the Department of Finance this morning setting out which resources they are entitled to draw down before the end of July and advising prudence.
All departments will be advised to prepare for cuts, except the Department of Health.
It is anticipated it will receive a 1.4% increase when the Budget is agreed.
This position was reached through extensive engagement between the Department of Finance and other departments. It is set to be constantly monitored.
It is understood the allocations are nowhere near to breaching the 75% which Mr Sterling (right) can access before July.
The public will feel the outworking of the crisis this weekend when instead of a rates bill householders will receive a letter from the Department of Finance explaining there will be a delay in bills being issued.
Land and Property Services is putting plans in place to issue bills in May — a month later than normal.
This bill will cover rates assessed from April 1, 2017, to March 31, 2018.
Normally, rates payments are spread over 10 months, from April to January. However, due to the crisis it is now envisaged that the payment period could run from May to February or June to March.
The long-negotiated cut to Corporation Tax has been described as now off the table, while thousands of community and voluntary sector workers have been placed on notice amid uncertainty over where inevitable cuts will fall. Projects already committed to — including the Executive’s flagship projects — will be funded, and farmers will also receive their Common Agricultural Payments as usual.
Mr Sterling said in a statement yesterday that the powers he will access are “simply an interim measure” to maintain services until a Budget is agreed and a Budget Act passed.
“These Section 59 measures enable cash to continue to flow to maintain the provision of services and provide a degree of certainty to departments,” he said.
“They are not a substitute for a Budget agreed by an Executive. Indeed, we are very clear that the prioritisation and allocation of financial resources is a matter for ministers.
“Departments are currently writing out to community and voluntary bodies to confirm interim funding designed to maintain the ongoing integrity of the key services they provide until an agreed budget is in place.
“With regard to capital expenditure, all Executive flagship and ongoing contractual capital commitments will be honoured into 2017-18.”