Budget briefing options raises calls for allocation review

A proposal to stop or reduce the Rates Support Grant included in a pre-Budget briefing document has once again raised questions about the volume of finances under the control of central government in Northern Ireland.

Currently, approximately 90 per cent of Northern Ireland’s annual budget is controlled at Stormont and while a call for local councils to be given greater power in the allocation of budgetary resources is long-standing, the lack of decision-making at Stormont has added greater weight to the argument.

In December last year, the Department of Finance (DoF) took the unique step of issuing a briefing document on the Northern Ireland Budgetary Outlook for the period 2018 to 2020, which illustrated the choices that might need to be made to set a Budget for 
Northern Ireland.

In order to achieve a balanced Budget, it looked at three main scenarios. These took account of the following options: the cutting of departmental allocations, leaving it to departments to manage the consequences and the reduction, or stopping, of support for some existing services and policies. It also looked at the feasibility of asking citizens to pay some more for the services they receive e.g. through the household rates.

Included in the proposals was the potential removal of the Rates Support Grant, a £18.3 million allocation to seven of the 11 local councils, which potentially generates 10 times as much into the private sector and social economies of those councils.

A consultation was issued on the various options and the Budget for Northern Ireland 2018/2019 was confirmed in March. It is supported by revenue-raising and flexibilities from the UK Government. This included £25 million generated by increasing the regional rate, and a decision to allow £100 million of existing funding (normally ring-fenced for capital) to be invested in ongoing public service provision.

Although the final Budget steered away from stopping the fund, there are concerns that the value of such schemes is not being recognised centrally and as a result may be vulnerable in future budgets.

In a statement, a Department of Finance spokesperson said: “In the Budgetary Outlook briefing document, a number of policies were set out to encourage debate around the possibility of reviewing their effectiveness in light of the wider budgetary context. One of these included the potential reduction or cessation of the Rates Support Grant. It is important to stress that the briefing document did not represent NICS or DoF policy and was therefore not a ‘DoF proposal’, but rather it was intended to provide context to the potential decisions required on the Budget.

“Following the confirmation of the budget allocation for 2018/19 to the Department for Communities (DfC), the Rates Support Grant has not been stopped for 2018-19. Instead it has been subject to a 4 per cent reduction, which is in line with other non-protected areas of the DfC Budget. Moving forward, it will be for Ministers to make decisions on Rates Support Grant policy, in the context of the wider Budget for future years.”

In a critical submission to the briefing document consultation, the Northern Ireland Local Government Association (NILGA), the umbrella body representing the 11 councils, described the briefing paper as “anti-investment”, highlighting that local authorities are currently the only politically functioning element of government in Northern Ireland.

Councillor for Armagh City, Banbridge, Craigavon Borough Council and NILGA President, Arnold Hatch, described the proposal as “extremely worrying”.

“Any scrapping or even reduction in this fund will have a significant impact on service delivery right across Northern Ireland. It would exacerbate a two-tier economy in Northern Ireland with most of the resources to create enterprise being consolidated in just four of our councils, curtailing the ability of the other seven who need to develop new businesses and modern infrastructure to invest in developing their districts.

“NILGA wants a restored and effective Stormont as soon as possible. In the meantime, the 11 councils need legislation, policies and resources to deliver services to local people whilst – in the Assembly’s absence – protecting local democracy and decision taking. We must protect mechanisms such as the Rates Support Grant.”

With the return of an Assembly at Stormont not likely to the happen in the short-term, the onus on councils to deliver additional services has increased and NILGA Chief Executive Derek McCallan believes a whole system review of how Northern Ireland’s annual budget is planned and delivered is needed.

“Expectations from departments, government bodies and more importantly the community itself will have to be matched by negotiated and formal funding for councils before such ideas can be designed and delivered. It is surely the time now for all levels of government to sit down, through the Partnership Panel and other task and finish mechanisms, to rewire how the public’s services are sustained and delivered in Northern Ireland.”

Budget 2018-2019

A summary of the finalised budget declared that it will:

• provide an increase for the Department of Health compared to the comparable actual funding levels in 2017/18, although given that cost pressures are increasing at a greater rate, difficult challenges in meeting demand remain;

• maintain schools budgets at 2017-18 levels in cash terms, as well as ensuring that other services to schools, some specific initiatives and youth services can continue to be provided. It will also ensure there are sufficient funded pre-school places to meet the demand for all three to four-year-old children in Northern Ireland as well as funding support for deprived communities through initiatives such as Sure Start and the Pathway Fund;

• provide funding for the Tackling Rural Poverty and Social Isolation programme as well as maintaining funding for vital services which provide significant value to rural communities and wider environmental benefits; and

• enable full funding for street lighting and traffic signals together with provision for a limited routine roads maintenance service including the repair of large potholes. It will also enable the continuance of existing public transport services and ensure minimal risk of water outage events and adverse environmental impacts.

The Budget will also enable departments to begin to transform how they deliver services and £4 million has been set aside for that purpose. In addition, through the financial annex to the Confidence and Supply Agreement, £100 million will be invested to progress health transformation; £20 million will be invested in severe deprivation programmes, £10 million in mental health services and £80 million in health and education pressures.

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