NI Executive Budget 2010

BRIEFING FOR CAL

COMMITTEE

Outline

UK background and context

The NI context

DCAL

UK background

Pattern of spending reviews UK borrowing Trends in public spending Public expenditure projections

National Spending Review Coverage

99/00

00/01

01/02

02/03

03/04

04/05

05/06

06/07

07/08

08/09

09/10

10/11

11/12

12/13

13/14

14/15

1998 CSR

SR 2000

SR 2002

SR 2004

2007 CSR

SR 2010

UK Borrowing has reached unsustainable level.

34.0

36.0

38.0

40.0

42.0

44.0

46.0

48.0

50.020

00-0

1

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

2015

-16

% o

f GD

P

Receipts

Expenditure

Significant reduction in UK public spending

Source: OBR Budget Forecast June 2010 – Table C5, Table C13 and Table C16

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

1991-9

2

1992-9

3

1993-9

4

1994-9

5

1995-9

6

1996-9

7

1997-9

8

1998-9

9

1999-0

0

2000-0

1

2001-0

2

2002-0

3

2003-0

4

2004-0

5

2005-0

6

2006-0

7

2007-0

8

2008-0

9

2009-1

0

2010-1

1

2011-1

2

2012-1

3

2013-1

4

2014-1

5

2015-1

6

% G

row

th

30

32

34

36

38

40

42

44

46

48

% o

f G

DP

% Growth In TME

TME % of GDP

UK PE Projections - Resource

180.0

200.0

220.0

240.0

260.0

280.0

300.0

320.0

340.0

360.0

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

Source: HM Treasury

£ b

illio

n

Cash

Real

UK PE Projections - Capital

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

55.0

60.0

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

Source: HM Treasury

£ b

illio

n

Cash

Real

Budget 2010 – NI context

How NI is funded Current spending by departments Capital spending by departments Summary of budget position Options for the Executive Current priorities DCAL’s wider contribution Way forward

How NI is funded

HM Treasury, 92.2%

EU Peace, 0.2%

Regional Rates, 5.6%

RRI Borrowing, 2.0%

2010-11 Current Expenditure Spending Plans by Department

DE 21.2%

DEL

DETI

DFPDHSSPS 47.5%

DOE

DRD

DSD DCAL 1%

OtherOFMDFM DARD

Note this excludes the spend on Policing and Justice

2010-11 Capital Investment Spending Plans by Department

DE 10.7%

DEL

DETI

DFP

DHSSPS 12.8%

DRD 35.2%

DSD 17.0%

DOE 11.5%

OFMDFM

Other

DCAL 4%

Note: this excludes the spend on DARD and Policing and Justice

Budget 2010 – Summary Position

Real terms reduction in funding from Treasury.

Inflationary cost pressures offset by: Public Sector Pay Freeze. Lower than expected construction price inflation.

Options for Executive

Increase Income Increase Regional Rate Asset Sales Domestic Water and Sewerage Charges

Additional Savings Reduce Administration Increase Efficiency Prioritise Services

Current Priorities

DCAL Contribution to the Wider Government Agenda

Economy Cultural Tourism Creative Industries

Health Long term impact on

health Ability to combat

preventable conditions

Education STEM Initiatives Creative Learning

Centres

Social Inclusion and EqualityShared futureCommunity cohesion

Way Forward

Identify departmental pressures and bid for resources – End July 2010

Develop Savings Delivery Plans – July to October

Ministerial Bilaterals - August

Outcome of national Spending Review – 22 October

Publish draft Budget & supporting documentation – End of October

Public Consultation – November & December Revised Budget – End of December

DCAL

Spending proposals

Savings allocations

DCAL – spending proposals

Current budget

Inescapable and unavoidable Assessed for alignment with Executive

priorities, impact on PSA indicators, impact on equality, good relations, poverty, social inclusion and sustainable development

DCAL – RESOURCE BIDS

Ulster Scots Academy Electronic Libraries World Police and Fire Games Creative Industries Innovation Fund N/S Language Body Adventure Activities Licensing scheme Equal Pay impact on sponsored bodies Pay and other cost inflation

DCAL – CAPITAL BIDS

Zero based approach

56 bids made, ranked by priority

Total value £485m over 4 years

Resource consequentials also bid for

DCAL – SAVINGS EXERCISE

Planning assumptions

Flat cash settlement based on 10/11 Reducing adjustments:

Emergency budget effect on baselines Funding for Executive policy initiatives Unavoidable cost pressures Constraints on access to End Year Flexibility

DCAL – SAVINGS EXERCISE

Planning assumptions cont.

• Total savings requirement is pro rated across departments

• Resource bids are met• No contribution from water charging

DCAL – SAVINGS EXERCISE

Effect on budgets:

Against an opening baseline of £109.57m –

11/12, a reduction of £5.2m 12/13, a reduction of £4.23m (£9.43m cum) 13/14, a reduction of £4.72m (£14.15m cum) 14/15, a reduction of £4.72m (£18.87 cum)

DCAL – SAVINGS EXERCISE

Allocation of savings

Use of approximate pro rating as a first step Differential phasing of budget reductions North South Bodies – need for agreement

DCAL – SAVINGS EXERCISE

Effects of proposed savings allocation

Development of savings delivery plans Potential impacts Mitigation of consequences – departure from

pro rating Deliverability

DCAL – SAVINGS EXERCISE

The Committee’s views:

Where should savings be made?