Northern Ireland

Could £30bn cost Northern Ireland £150m

Thirty billion pounds in extra spending on infrastructure projects could leave Northern Ireland £150 million worse off.

That's the conundrum facing Finance Minister Sammy Wilson as he looks ahead to the Chancellor's Autumn Statement on Tuesday.

The Chancellor has already trumpeted his infrastructure boosting measures - £5bn taken from current spending to help lever-in billions more to build railways, roads and bridges across the UK.

All good stuff. But the problem comes in what are known as "Barnett consequentials". Basically when Westminster increases spending, Northern Ireland's spending departments see a corresponding lift. When it cuts, they see a corresponding cut.

Mr Wilson is focused on the initial £5bn cut. If the normal rules apply, that could mean a cut of up to £150m taken out of Stormont's spending pot this year.

But surely Northern Ireland stands to benefit from that huge infrastructure pot? Unfortunately, the answer isn't clear. Because the infrastructure money is essentially coming from the private sector - big investment funds - but underwritten by the public sector (the £5bn that's being found elsewhere), there are structural reasons why Northern Ireland may not benefit.

Access to cash

Spending on these sorts of projects is centralised at Stormont and subject to central government spending rules which are quite inflexible. This provides little incentive for Stormont to access this pot, because it would mean matching cuts in departmental budgets.

In Britain local authorities have access to this pot of money and can raise funds themselves on the bond market.

And the size of the projects on offer in Northern Ireland may not be large enough to attract the big investment funds. The A5 is not a contender, because the £800m project only made sense whenever another government was willing to pay for half of it.

In a worst case scenario - which is obviously troubling the finance minister - Stormont stands to lose from the cuts and miss out on the spending.

The minister also raised concerns that the scheme to get banks lending again might need extra tweaking in Northern Ireland. The Credit Easing scheme is designed to encourage UK banks to lend more by using government money to insure their risk.

The finance minister is concerned that the mix of Irish and UK banks in Northern Ireland means there may be less take-up of the scheme.

However, industry sources say Northern Ireland's four main clearing banks - Ulster, Northern, First Trust and Bank of Ireland - are all likely to participate.

Full details will only emerge after the Chancellor outlines his statement to the House of Commons at lunchtime on Tuesday.