Chris Heaton-Harris and top NIO official say £660m ‘black hole’ reduced to £297m by cutting overspend commitments

The Secretary of State was speaking ahead of the expected announcement of swingeing budget cuts on Thursday.

Addressing the Northern Ireland Affairs Committee, the Daventry MP stated: “On the pressures in this financial year, on October 28 last year, when Ministers fell away and the last remnants of the Executive disappeared, a couple of weeks before that, the Minister of Finance described to me as Secretary of State a £660 million black hole in NI finances.”

Mr. Heaton-Harris claimed that Colin Perry, Director of Economy and Protocol at the Northern Ireland Office and heads of department in the NI Civil Service had managed to cut the ‘black hole’ in half.

"Working with the permanent secretaries, we then got it down to a gap of £297 million, within year. That is still a big gap in an in-year budget.

"Some 90 per cent of NI’s finances comes from the block grant. The vast majority of the other 10 per cent comes from the regional rate. So you can see where the income is and what the income equals, and then you have the ongoing spending commitment.

"So that is why. Over years, sometimes budgets haven’t been set, and sometimes policy priorities haven’t been set,” he stated.

SDLP MP Claire Hanna asked how a ‘black hole’ of £660m had been reduced so dramatically.

"You mentioned the projected overspend of £660 million, which got a lot of airing, including in communications from the NIO. I just wanted to understand how that was revised down to £297 million. What accounts in the main for the gap between those figures?” she asked.

The Secretary of State replied: “Lots of it, actually, you could say is down to simple clarity of spending and no guesstimates.”

Mr. Perry said the £660m figure was cut to £297m by reducing departmental funding commitments that were overspends.

He stated: “The £660 million was put out by the Finance Minister, as the Secretary of State said. It is also worth noting that the Fiscal Council talked during the earlier part of 2022-23 about how some Ministers had continued to make funding commitments at the same time as indicating that they were going to overspend.

"There were challenges, but the clarity that came allowed them to work out—and it was for them to work it out, because the Secretary of State was very clear that he does not have that power—where they could bring that spending back.

"That allowed us to bring it back from £660 million down to £297 million, but we were not able to bring it back to getting the budget to balance. That is why we have ended up having to carry forward some funding.”

Ms. Hanna asked the minister if he had asked the British Treasury about the possibility of reducing the deficit over a number of years to which he replied: “We are still talking to the Treasury.”

The South Belfast MP said: “I think that we have all seen over the last decade and a bit that austerity is the prioritising of paying down debt over every single other outcome, and it has been damaging.”

Derry & Strabane Council reserves to cover £5.5million overspend