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NI Executive agrees to £100m loan

10 October 2014
Last updated at 08:50

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The Department of Health will receive £60m and the Department of Justice will receive almost £30m

Northern Ireland budget pressure

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‘More positive mood’ at talks

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The Northern Ireland Executive has agreed to a loan of up to £100m from the Treasury.

The deal was brokered by the Democratic Unionist Party with the Chancellor, George Obsborne.

It means extra cash for departments, including £60m for the Department of Health and almost £30m for the Department of Justice.

However, the arrangement has been criticised by other parties as an “expensive sticking plaster”.

The Treasury had been asked to supply Stormont with a one-off loan of between £100m and £150m to ease its budgetary crisis.

It is understood that Peter Robinson and Finance Minister Simon Hamilton made the proposal to the chancellor.

Analysis: BBC News NI political editor Mark Devenport

George Osborne said he was concerned the Stormont Executive has found itself in such a dire financial situation.

The money he is willing to lend, he makes clear, will be deducted from the executive’s block grant next year.

The chancellor repeats his intention to levy fines on the executive due to its delay in implementing the UK’s welfare reforms.

Finance Minister Simon Hamilton said he would have preferred a resolution to the dispute over welfare, but he says the loan allows the executive to deal with urgent financial pressures in the health service, the PSNI and services for victims.

Justice Minister David Ford is getting nearly £30m, but he did not like the idea of Stormont running up yet more debt.

The loan will ensure Stormont does not breach its spending limits by more than £200m at the end of the financial year.

However, it will increase the amount Stormont will owe the Treasury next year.

Mr Hamilton said a letter from the chancellor made it clear that Northern Ireland would incur £87m in penalties this year and another £114m next year for a failure to implement welfare reform.

However, he said he was hopeful those penalties might be waived if the parties reach a deal in the near future.

“I hope that if we can get agreement on welfare reform that perhaps those fines may be waived and we may not have to pay that. That would be a tremendous help to public services in Northern Ireland,” he said.

“It wouldn’t solve all of the problems that I face and executive colleagues face, but it certainly would be a great assistance.”

Speaking at a DUP event on Thursday night, First Minister Peter Robinson said the loan was conditional on Stormont agreeing a draft budget for 2015/16 by the end of October.

Justice Minister David Ford said the move was “not good management”

Mr Robinson raised the possibility of opening a voluntary redundancy scheme for the public sector which, he said, could save about £160m a year.

It is also understood that welfare reform is not part of the deal with the Treasury, but instead will feature in the planned political talks due to begin next week.

On Thursday night, Mr Hamilton said: “We had an immediate pressing problem in terms of difficulties within our health services, within victims services, within job creation and within justice.

“We have now been able to cover those pressures to ensure that those problems are now averted, and we can get on with delivering services in Northern Ireland.”

While DUP and Sinn Féin ministers backed the loan deal, Alliance, the SDLP and the Ulster Unionist Party all registered their opposition.

Alliance leader David Ford said taking money from next year for this year was “simply not good management”.

“It’s like borrowing on a second credit card when you reach your limit on a first credit card,” he said.

Regional Development Minister Danny Kennedy of the Ulster Unionist Party said: “I believe that it doesn’t fully deal with the economic issues before us, as an executive.

“It simply seeks to push things down the pipe and put a sticking plaster over what remains a gaping hole.”

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NI Executive agrees to £100m loan

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