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PN B3

12 July 2004

New spending plans for Northern Ireland

New spending plans for Northern Ireland announced today will provide for spending in areas that will be the responsibility of the Northern Ireland Executive to grow by an average annual rate of around 3 per cent in real terms over the next three years. In 2007-08, public spending will be £1.2 billion higher than in 2004-05.

Further details about spending plans within Northern Ireland will be the subject of separate announcements in due course.

Secretary of State for Northern Ireland, Paul Murphy, said:

“I am delighted with the settlement for Northern Ireland. The settlement represents a major boost to public services and prosperity in Northern Ireland. I and my Northern Ireland Ministerial team will now translate this into proposals for the best possible public services and investment for Northern Ireland, which will be published in the Draft Priorities and Budget for Northern Ireland in September.

“The Government will continue to make a success of the EU PEACE programme in Northern Ireland. I am delighted that the Chancellor has made available £169 million for PEACE, including an extension of the programme to 2006, subject to EU agreement, and consultation with the Irish Government”.

Details

• In line with the objectives of the Government’s efficiency review, efficiency savings will be released to strengthen further front line delivery in Northern Ireland. 2.5 per cent a year efficiency savings will be achieved, delivering some £535 million efficiency gains by 2007-08. Northern Ireland is engaged in spending review efficiency and evaluation exercises as ambitious as those in England in reducing back office and related areas.
• The Government is committed to implementing an ambitious programme of reform including steps to modernise the water industry, and reforms of the rating system and public administration. The Chancellor is continuing to make available borrowing under the Reform and Reinvestment Initiative to improve infrastructure, financed by increased rates.
• The spending plans to be announced in September will also set out a number of high level strategic targets for improving delivery in all the key public services in Northern Ireland. This will include challenging new targets for improving health, education, transport, economic development, social security, housing and culture as well as working with the Northern Ireland Office to deliver the peace process and tackle the causes of crime.
• The Northern Ireland Departmental Expenditure Limits for the next three years are £7,420 million (plus £80 million for PEACE), £7,931 million and £8,296 million. They represent a real terms average annual increase in provision over the next three years of around 3%.

NB: In addition there is £62 million and £80 million for PEACE in 2004-05 and 2005-06.

Notes for editors

1. The increases in the Northern Ireland DEL in the spending review have been determined on the basis of the Barnett formula, which ensures that Northern Ireland receives a population-based share of changes in comparable spending in England.
2. The devolved administrations’ budgets continue to be determined within the UK framework of public expenditure. Responsibility for UK public expenditure allocation remains with the Treasury. Once overall public expenditure budgets have been determined, the devolved administrations have freedom to make their own spending decisions within the overall totals on functions under their control in response to local priorities. The devolved administrations will make their own announcements in due course about their detailed spending plans. Under suspension of devolution, the Barnett formula funding arrangements continue to apply to those areas of expenditure that will be the responsibility of a restored Northern Ireland Executive.
3. For further details please contact the Northern Ireland Office Press Office on 02890 378268 or 02890 378278 (Duty Officer 07693 654321) or visit the website on http://www.nio.gov.uk/.

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