Finance Minister, Sammy Wilson responds to emergency Budget 2010

Commenting on the range of tax and spending measures announced by George Osborne, Mr Wilson (pictured) said : "The need to reduce the level of UK public sector borrowing inevitably meant that the Chancellor of the Exchequer would have to introduce measures to increase the level of income from taxation.

"However, the main reason for the increase in government borrowing has been the unsustainable growth in public spending in recent years which will be equivalent to 47.3% of GDP this year. In this context, it was to be expected that the main focus of the emergency Budget would be on reducing the level of public spending with cuts of over £40billion by 2014-15."

Responding to some of the measures announced by the Chancellor of the Exchequer, Mr Wilson expressed disappointment at the increased burden on low and middle income families: "It is disappointing that the Chancellor has proposed to increase the level of VAT which will impact most on lower income families as well as the freeze in Child Benefit and the cuts in Housing Benefit and Tax Credits.

"This is balanced against the very welcome news that the link between earnings and the Basic State Pension will be re-established. However, the most significant change for welfare recipients will come from the technical change in the measure of inflation used to index benefit levels.

“In respect of the business sector, I welcome the reduction in the main rate of corporation tax from 28% to 24% by 2014-15 and the reduction in the rate for small firms to 20%. There are also measures to promote employment with the increase in the threshold for employers National Insurance contributions and the increase in the Personal Income Tax Allowance. I also look forward to the consultation document on rebalancing the NI economy which is due to be published in the autumn."

Looking forward to the 2010 the Spending Review in the autumn, the Minister highlighted that the latest forecasts for UK public spending would have serious consequences for the Executive: "The Chancellor has indicated his intention to reduce the level of spending in UK departments by 0.4% per annum in cash terms over the next four years in respect of current expenditure and 6.9% in terms of capital investment. The precise implications for the Executive will depend on the specific details of how the cuts are distributed between Whitehall departments, which will only be available at the conclusion of the 2010 Spending Review in the autumn. In addition, as part of each spending review, the Treasury also makes additional adjustments, on top of the headline figures, which will result in further reductions.

However, it has been clear for some time that there will be fewer resources available for local public services in the coming years. This is in the context that normal inflationary pressures and the need to continue to improve the standard of public services will add further pressures, although the two year public sector pay freeze announced by the Chancellor will ameliorate the situation.

Summing up the implications of the emergency Budget Report for the NI Executive, the Minister said: "The public expenditure context set out by the Chancellor of the Exchequer today highlights the fundamental importance of the Executive focusing its efforts on restructuring the local economy away from an overreliance on the public sector. This will require more effective support for local business and real reform of the pubic sector.

In taking this process forward, my Ministerial Colleagues and I are currently working to identify areas where significant savings can be made over the period to 2014-15, with least possible impact on the delivery of the public services that provide the most benefit to the people of Northern Ireland."

Details of the Government’s Budget Report are available on the HM Treasury website: www.hm-treasury.gov.uk