The Secretary of State, Theresa Villiers, has refuted claims the Government has reduced the Northern Ireland block grant by £1.5billion in order to reduce its own borrowing whilst urging Belfast to borrow money to lay off civil servants.
She acknowledged there have been reductions to the block grant in real terms but claimed the Northern Ireland Executive now has a bigger budget than when it set out its Programme for Government (PfG).
The Secretary of State made the claims when questioned by MPs on Monday (December 15) about the stuttering all party talks and the fleeting visits of Prime Minister David Cameron and Taoiseach Enda Kenny to Belfast last week.
Labour MP John McDonnell pointed out that on the one hand the Government was reducing the Northern Ireland block grant to help reduce UK borrowing whilst suggesting that the Executive use the Reinvestment and Reform Initiative (RRI) to borrow money to pay off public sector workers.
Mr McDonnell said: “Some £1.5billion has been cut from the Northern Ireland budget since 2011 to assist the UK Government in reducing borrowing and tackling the deficit, yet the solution now being put forward is to ask Northern Ireland to increase its borrowing by £500 million. Is that not simply inflicting a high burden of cost on the residents of Northern Ireland?”
Mrs Villiers replied: “I am afraid that I do not agree with the hon. Gentleman’s figures on the Northern Ireland block grant, which has actually gone up in cash terms.
“In real terms there has been a reduction, but it has been around only 1 per cent for every year of the spending review. The reality is that the Northern Ireland Executive have a larger budget now than they did when they set their programme for government, because of Barnett consequentials.
“Those figures compare favourably with policing and the Home Office, for example, which have had to take a significant cut in England, and English local government, where the reductions have also been very significant.”
During the same session Conservative MP Nigel Mills claimed England was carrying Northern Ireland.
“May I agree with the Secretary of State’s earlier sentiment that the solution to every problem in Northern Ireland cannot be more money from the English taxpayer?” he said.
“Will she now confirm that there will be no bigger offer than the £1billion that was talked about last week to get this deal over the line?” he asked.
The Secretary of State replied: “As I have said many times, the solution to these problems cannot be a big cheque from the UK Government.
“That is partly because it would not solve the problems, and partly because there is no more money.
“We have made it clear that we are not prepared to subsidise a more expansive welfare system for Northern Ireland.
“We are certainly prepared to continue to discuss the funding of matters such as new institutions on the past.”
Londonderry MP Mark Durkan asked if Mrs Villiers knew RRI borrowing flexibility was supposed to realise key capital projects, rather than public sector redundancies.
“Does the Secretary of State recognise that £700 million of an existing borrowing power that we originally negotiated for strategic capital investment to be used for voluntary exit schemes does not seem to people to be new money or a big attractive offer?” he asked.
She said: “I assure the hon. Gentleman that the flexibilities offered in relation to borrowing powers would be of significant assistance to the Northern Ireland Executive in delivering the voluntary exit scheme for which they are calling. It was a significant and serious offer, but one that accepts the realities of the financial constraints we are under.”