Page last updated at 14:24 GMT, Tuesday, 22 September 2009 15:24 UK

370m funding cuts 'by Christmas'

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NI Finance Minister Sammy Wilson denied there was a 'black-hole' in the accounts <p

Executive spending cuts of £370m are needed in the coming year the NI finance minister Sammy Wilson has said.

In a confidential memo to Executive colleagues, seen by the BBC, Mr Wilson highlighted several budget pressures.

The paper cites the continued deferral of water charges as well as swine flu and civil service back-pay.

He said cuts of £200m were required from current expenditure, as well as £172m from capital spending - such as roads, hospitals and schools.

The paper makes it clear that ministers cannot go on trying to ease financial pressures by looking for unspent funds throughout the budget across the year.

It calls for "early action" and "difficult decisions". Deferring water charges in 2011 could cost up to £420m, the minister warned.

However, even if the regional development minister recommended water charges, Mr Wilson doubted there would be time to pass legislation to introduce household water bills next year.

Mr Wilson denied there was a "black-hole" at the centre of his accounts and said he was disappointed the memo had been leaked.

"I told the Executive at the last meeting that I would be bringing to them a paper indicating the consequences of a decision that we made and all signed up to - every party - that we would defer water charges," he said.

"The consequence of that is that if we don't find the money from charges, then we find it from departmental budgets.

"This is giving early warning to ministers that here are the consequences for your budget of a continuation of this policy."

He said there needed to be forward planning to ensure there was a "seamless move into next year's spending" and that it was not "an emergency budget".

Pressures

His paper sets out a range of options to achieve the cuts and asks Executive ministers for their views.

The recession means the Executive has not received the income from land sales that it expected.

The paper also reveals a delay in two major investments - the Department of Environment's water management scheme and the Royal Exchange, a £360m retail and residential project in Belfast.

David McNarry of the Ulster Unionist Party said he had warned the DUP about the shortfall.

"When the UUP produced an economy paper back in August, the DUP were quick to jump in saying that they could not fathom how I had calculated my figures and that there was no problem with Northern Ireland's budget," he said.

"This is not something that will simply go away - the DUP need to have a mature debate about the state of Northern Ireland's economy.

"That is what we are asking for - that is how he can provide good government at this economically uncertain time."

SDLP finance spokesman Declan O'Loan said the "penny has finally dropped" with the finance minister.

"This paper vindicates what the SDLP has been saying for months," he added.

"However, the immediate £370m hole identified by the minister is only the tip of the iceberg.

"Last week the SDLP produced a document outlining a £2 billion black hole. This was then backed up by another Executive party (the Ulster Unionists) just 24 hours later.

"And even today the respected economist Mike Smyth said there was an urgent need to revisit the budget to identify spending pressures and priorities."



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