To ask the Minister for Employment and Learning for his assessment of the impact of departmental funding cuts on measures to meet the projected skills needs of the economy as outlined within his Department’s Skills Strategy.

The cuts to my Department’s resource budget for 2015-16 were unprecedented in size and scale; £61.5 million of cuts are required in one year, representing 8% of the total resource budget. This has already impacted negatively across several of my Department’s programmes and partnerships which are key to the delivery of the Northern Ireland Skills Strategy ‘Success Through Skills -Transforming Futures’.

There has been significant impact in both the higher and further education sectors.

Higher education has a key role to play in ensuring a steady supply of individuals with the skills needs required by local businesses. To ensure this the financial sustainability of the sector is crucial. However, the higher education institutions are facing £16.1million of cuts in the 15/16 financial year. This has led to a reduction of 540 full-time undergraduate places this academic year. Over the next three years a total of 1,910 undergraduate places will be lost. Indeed, should budget reductions continue this situation will only worsen. It is also worth noting that even before these significant cuts there was already a funding gap between our local higher education institutions and their counterparts in England – between £1,000 and £2,500 per student place depending on the subject band.

Although both universities have endeavoured to protect narrow STEM (Science, Technology, Engineering and Mathematics) places to ensure that subject areas offered more closely reflect the needs of the economy, it is inevitable that these cuts will be extremely detrimental to the local skills needs of business and Northern Ireland’s future economic prosperity. Indeed, under a lower corporation tax environment, the demand for higher level skills will increase.

It is clear to me that the funding model we currently use to support our higher education is no longer sustainable and that is why, on 15th September, I launched a wider conversation about the future financial sustainability of higher education in Northern Ireland entitled “The Higher Education Big Conversation”.

The Big Conversation will provide the opportunity to have an informed discussion about the financial sustainability of the higher education system here with all stakeholders and the exploration of alternative solution for Northern Ireland’s higher education system. When the process is finished, I will be taking stock of the options open to us and presenting the findings to my Executive colleagues for consideration.

The further education (FE) sector plays a central role in the implementation of the key strategic priorities of the Programme for Government 2011-2015. The importance of a having a vibrant, flexible FE sector is crucial to ensuring our vision in rebuilding and rebalancing the Northern Ireland economy.

Following the unprecedented level of budget cuts to FE this year; colleges have had to implement a major programme of savings. To mitigate the effect of these changes, my Department has been working closely with the sector to safeguard provision, where possible, that supports economic development and workplace skills, and which includes academic as well as professional and technical skills.

As a result, colleges have had to make very difficult decisions in prioritising provision, whilst at the same time being mindful of the need to develop and grow the provision of higher level skills, particularly those skills that focus on the STEM subjects.

‘Enabling Success’, the Executive’s new Strategy to reduce the persistently high levels of economic inactivity in NI was published on 20 April 2015. The level of economic inactivity is a major economic and social problem which, if left unaddressed, has the potential to both hinder Northern Ireland’s economic growth and to contribute to increased economic strain on finite public resources, such as welfare budgets.

However, given the major and ongoing pressures on the Executive’s budget, and the subsequent absorption of these pressures through all Departmental baselines, including my Department, the Strategy remains almost exclusively unresourced. Subsequently, almost all of the implementation projects across a number of government departments have not been able to commence due to a lack of resources.

Budget reductions have also reduced our ability, more broadly, to provide or support opportunities for upskilling the workforce through specific programmes and initiatives in other areas.

If further cuts are required in 2015-16 my Department will seek to act as strategically as possible, which means trying to protect, first and foremost, those areas that are most relevant to the economy, as well as looking to those services that are provided to those who are most vulnerable.

I am pleased to say, however, that despite the challenging financial and economic climate, Northern Ireland has continued to make progress against the targets in the Northern Ireland Skills Strategy since its publication in 2011. I have continued to press ahead with new approaches for optimum skills realisation such as the new Apprenticeship, Youth Training and Further Education Strategies and the HigherEducationBigConversation.

In summary, the challenging financial position facing my Department has already impacted across the skills delivery landscape and I anticipate that reduced budgets will continue to impact on the provision of skills required to support the economic aspirations for Northern Ireland. In response to a reduced budget I have committed to ensuring that available budget is focussed on the most economically relevant areas and used to address priority strategic needs and I will continue to do so.