tormont departments are overspending considerably amid weak budgetary controls due to the absence of a ministerial executive, a fiscal watchdog has warned.
The Northern Ireland Fiscal Council, an independent body that scrutinises how public money is spent within the area, said the “unavoidable impact” of inflation and pay pressures was being compounded by the powersharing vacuum.
The newest Department of Finance data signifies that departments are set to overspend by £650 million (nearly 5%) on the day-to-day prices of operating public services and by £187 million (over 10%) on capital funding initiatives.
The council warned that, as spending guidelines stand, the overspend will have to be clawed again by the Treasury when it allocates its block grant to Northern Ireland within the subsequent monetary year.
With no ministers currently in place due to the political impasse over the Northern Ireland Protocol, Secretary of State Chris Heaton-Harris is set to step in to cross a budget for Stormont at Westminster.
Mr Heaton-Harris will have to make a number of selections that will have been taken by devolved ministers if an executive was in place.
Those embrace deciding which departments to prioritise with funding, whether or not to implement the suggestions of the UK pay assessment our bodies and whether or not to borrow £140 million for capital spending that was included in a draft budget drawn up by former finance minister Conor Murphy last year.
The council said some of the pressures being experienced in Northern Ireland had been additionally at play throughout the devolved areas and inside central government.
Those embrace unexpectedly robust upward pressure on inflation and pay settlements.
However, the watchdog said the dearth of executive in Belfast was “compounding an already difficult situation”.
It highlighted that the powersharing deadlock means an absence of agreed budget; no in-year reallocations by means of monitoring rounds; no ministers to take selections on spending that exceed allocations; and no Assembly oversight committees to scrutinise Stormont’s fiscal administration.
Sir Robert Chote, chair of the council, said: “Higher inflation and upward pressure on public sector pay are creating challenges for public services right across the UK.
“But the absence of a functioning Executive and the inability of the previous one to agree a Budget are making it even harder to manage these pressures here.
“As well as confronting the difficult near-term decisions, Stormont and Whitehall should think carefully about how best to manage similar situations in future before they occur again.”