A two-year timetable for Stormont to repay an almost £300 million overspend is “overly punitive”, a senior economist has said.
It was also speculated that the timescale is designed to be a “stick” for the restoration of the effectively collapsed Executive.
Dr Lisa Wilson, of the Nevin Economic Research Institute, made the remarks to the Northern Ireland Affairs Committee at Westminster in an examination of the funding and delivery of public services in the region.
Also giving evidence to MPs, Sir Robert Chote, chair of the Northern Ireland Fiscal Council, described a “difficult environment” for this year’s budget.
When we look at how the £297 million was spent, it wasn't spent on sweets, it was spent on basic public services— Dr Lisa Wilson
He said the absence of local ministers exasperates an already difficult environment with inflation and pay pressures, describing a “perfect storm of UK-wide and NI-specific issues”.
Northern Ireland Secretary Chris Heaton-Harris is setting the budget in the absence of ministers at Stormont.
Departments have been warned they must find savings in the difficult budget which also includes the repayment of a £297 million overspend from the previous year across two years.
Ms Wilson, who is also a member of the Fiscal Commission NI, said the impact of Northern Ireland having to repay £297 million in two years will “massively impinge” on budgets in an already challenging environment.
“I think that the position that has been taken is an overly punitive one and it appears to be one that is waving a stick at the Northern Ireland Executive to get back into place,” she told MPs.
“When we look at how the £297 million was spent, it wasn’t spent on sweets, it was spent on basic public services.
“I firmly believe that it is overly punitive and will impact on durability in the longer term conversation of Northern Ireland’s public finances to become sustainable because it’s going to impinge massively this year and into next year, in a continuing environment of public spending pressures right across the UK.
“In terms of sustainability of the budget going forward… in any kind of agreement between the UK Government and the Northern Ireland Executive, I think the first thing that would need to go would be this £297 million to set a fair place under which the Northern Ireland Executive might be able to get back into a position, albeit with continuing spending pressures, to go forward.”
