Most challenging times for public finances 'in living memory' says economist, as cuts loom

This is "perhaps the most challenging period for funding the public sector here in living memory" for senior economist Dr Esmond Birnie.

Anyone on the street knows that from personal experience already.

Shoppers in Banbridge told View From Stormont that accessing healthcare and childcare were among their top concerns around how bruised services will hurt them too.

Today, more bad news impacting vulnerable groups, after the Department for Communities laid bare how it is facing a £111.2 million funding gap, because its allocation is 15.5% short of what it needs.

Areas proposed for a funding reduction include social security delivery, discretionary support grants, employment support, arm's length bodies and third party organisations, rates supports grants for councils and the Supporting People programme.

It is anticipated that 600 fewer social houses will be built in the next year than the DFC had planned.

Meanwhile, the Education Authority (EA) expects a funding gap of over £200million in its allocation for the 2023/24 financial year, and its board held a meeting described as 'unprecedented' on Tuesday to discuss the situation.

It approved cuts of £14.1million but said no to around £5.5 million of cuts.

These will be submitted to the Department of Education for consideration.

If it feels like things are bad, but are they really worse than ever?

"I think the sums of money that departments say they are missing are bigger in percentage terms that they were at the start of the austerity period, 2010," said Dr Birnie of Ulster University.

"So that gives you some indication it's harder this time round.

"We have had an internal problem to some degree, to some degree, this is a made-in-Stormont problem in the sense that devolved government for a long time back to at least 2010 before that, arguably failed to make sufficient provision for raising revenues tax revenues and charges.

"And in this sense we were able to sustain that for a while, but now that has caught up with us. That's all come together, the so-called perfect storm. It's going to be immensely challenging."

If we already know things are not looking good, aside from sourcing a magic-money tree, how can these gaps be addressed to prevent harm to those who rely on struggling if not slashed services?

"Well, there are a number of possible fees or charges that could be introduced or reintroduced, the largest which relate to domestic water charges," Dr Birnie said.

"But there are also questions around university tuition fees, prescription charges or they absence of them, and the extent to which free public transport is provided to senior citizens.

"There is also, I think, maybe a relatively small possibility that there could be some sort of financial package or a degree of generosity from the London government or indeed the Treasury in London.... But it has to be said that there have been packages in the past, and the great danger of this would be that it might encourage an efficient decisions of the future, as arguably it did in the past."

Dr Birnie said a return to Stormont would be "highly desirable in terms of accountability", but will not alter the mathematics of the precarious financial situation aside from any possible package.

"In terms of the fiscal or the tax and spending situation, the mathematics of the problem we have, it will hardly change that at all.

"We will still have that gap between the level of money that it seems we need, the level of money we actually have to fund public services.

"The gap will still be enormous. The Barnett formula basically gives Northern Ireland a percentage based in our population of an increase in cash, which has already happened in England, so we get a share of that.

"The problems is, we already have a higher level of spending per person, so the additional spending per person actually adds up being less than in England," he said, referencing the infamous 'Barnett Squeeze'.

Explaining that in layman's terms, he said: "So over a period of time, the Barnett formula will operate to squeeze the level of funding in Northern Ireland down towards the English level.

"Traditionally we've been 30, 40% above the English level funding per person, but we're now down to 20% and other things being equal, that trend will continue.

"So something may have to be done about the Barnett formula looking forward to give some credit to the Stormont system or to recognise the difficulties they're operating on.

"This is something they cannot be held responsible for the way the Barnett formula works. But having said that, the decisions made in the past - five years ago, ten years ago, 15 years ago, those were decisions made by Stormont administrations which didn't put enough emphasis on raising tax revenues from Northern Ireland."

The rhyme or reason behind the cuts will be of no comfort to the wide spectrum of services hit by them.

At 3pm, St Teresa's Primary School in Andersonstown is alive with the sound of children playing indoor football with a coach as part of the long running Extended Schools Programme.

Principal Terry Rodgers shared his fears about the loss of this and other services with View From Stormont.

Professor Noel Purdy is steeped in the world of education.

He is alarmed by news of blow after blow to "significant, important and valuable" programmes.

The director of research and scholarship at Stranmillis College is working on a policy document as a matter of urgency alongside peers at Queen's, St Mary's, Ulster University and The Open University.

"These are deep cuts that are impacting on a very wide range of fundamental programmes, programmes that have been running for many years on occasion in Northern Ireland, like the Extended Schools programme, it's been running since 2006, providing breakfast clubs and homework club funding for many schools right across Northern Ireland.

"But many more recent funding programmes as well have been axed," the professor told View From Stormont.

"That includes a very recently introduces scheme to provide free period sanitation products in schools.

"Up to ten or 15 programmes have been cut within the last few weeks. And these are really significant and important and valuable programmes that make a real difference to children in Northern Ireland, like the Engage programme, which was a post-COVID response providing teachers and small groups in one to one work with children, the digital devices programme, providing laptops and iPods for children who otherwise couldn't afford them.

"The counselling programme for primary schools, which reached out to tens of thousands of children in Northern Ireland, as well as early years programmes on many more, including capital programmes where we have been told that that the Department of Education and the Education Authority are unable to provide new buildings, but also that the maintenance of existing crumbling buildings is going to be severely impacted as well."

The group from all of Northern Ireland's higher education institutions is collecting evidence and writing about the cuts.

"We hope that that will be a wake up call, I suppose, for what the evidence is telling us will be the impact of these cuts. We already have a deeply unequal society in Northern Ireland. We've had that for many years.

"We see that in our outcomes and the attainment gap between children on free school meals and those not in free school meals, where the attainment gap is around 30 percentage points at GCSE, and a lot of the measures which are being currently cut have been measures which have attempted to address that gap to try to bridge that gap.

"These cuts will only serve to further widen the attainment gap and to further widen the educational disparities and the income disparities between children from disadvantaged backgrounds and those from non disadvantaged backgrounds."

They hope to have their paper finished by June.

Who knows how many services will have had to halt by then, having fallen into the gap between what monies Stormont has, and what it actually needs.

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