Monday, 26 July 2010

The Cuts - A Guide

NICVA has done something useful! If you can get your mind around that concept then look further.  They have commissioned Oxford Economics and Economic Research Institute of Northern Ireland to produce a report on the likely impact of the bduget cuts on Northern Ireland - 'Cutting carefully - how repairing UK finances will impact NI'. (Full report here - pdf file).

As Unionism is presently debating the Union in 2021 it should take cognisance of the warning that:

"...the implications will be significant and will shape the economic and social conditions in the economy for a least the decade ahead."

The OBR's credibility for projections has a question mark over it and this report believes that it has underestimated the impact of cuts on economic growth:

"Oxford's view is that the tightening will take more out of the economy in the short run..."

From the emergenct budget announcements, it doesn't provide a figure for the impact of Annual Managed Exepnditure cuts but it estimates the impact on the Departmental Expenditure Limits (DEL):

"Total spending in nominal terms will fall by 3.5% by 2015/16, and by 14.4% in constant prices...this will translate to a cut of at least £1.2bn by 2015/16 in constant 2010/11 proces."

For those who were so keen to abolish Barnett it highlights how:

"The Barnett formula provides some modest cushioning."

It highlights the issues not only for revenue but equally the capital budget.  Northern Ireland is already trying to deal with a legacy of under-investment of capital and it warns:

"We would also draw attention to the widening gap between what the executive expected to be able to spend on capital projects and the amount that it will have available for this purpose.  By 2015/16 this gap could exceed £1.5bn, which will cause great difficulties for those departments such as HPSSPS that were scheduled to benefit later rather than sooner in the Investment Programme."

As well as outlining the principles that should be followed for a good budget process it makes clear that:

"...totally protecting large spending programmes in the face of deep cuts to the overall block is not feasible.  Both health and education will need to bear some of the burden of cuts if the Executive is to maintain a meaningful presence in other spedning areas."

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