End of Soviet Unionism?

It seems Northern Ireland’s economic prophets of doom are out and about again with First Trust Bank’s latest Economic Outlook and Business Review saying the current economic situation could be as good as it gets. Meanwhile, the Sunday Times has described the growth in public spending in parts of the UK as so rampant that it is resulting in the “sovietisation” of swathes of the country. Northern Ireland is leading the way in the reliance on the public sector stakes, rising to 71.3% of gross domestic product from 65.2% just four years ago.

Citing the same figures from the Centre for Economics and Business Research, the Telegraph points out that public spending has risen as a share of UK economic output from 38.9pc in 2001-02 to 43pc in the last financial year.

“The regional breakdown shows that Northern Ireland now relies for 71.3pc of its economic output on the public sector. Public spending in Wales is equal to 62.4pc of its economic output, while in London public spending is only 33.4pc of economic output,” it writes.

“In cash terms, the divide is equally apparent. The state spent £9,084 for each member of Northern Ireland’s population last year. The corresponding amount in Scotland is £8,265, and in London £8,037. In the east of the UK, public spending per capita was only £5,864.”

According to the Sunday Times, what it calls the “sovietisation of parts of Britain” is a result of Chancellor Gordon Brown’s huge increases in public spending. Things look even worse when the figures are adjusted for comparison with other countries.

“On this basis, public spending is equivalent to 76.2% of the size of the Northern Ireland economy this year, 66.2% in Wales, 64.9% in the northeast, 57.7% in Scotland and 56.1% in the northwest.

“This compares with 56.1% in high-spending Sweden, 54.1% in France, 51.9% in former communist Hungary, 51.5% in Denmark, 46% in Germany, 42.6% in the Czech Republic, 41.2% in Poland and 36.3% in Slovakia.”

The figures showing a growing reliance on the public sector purse coincide with the worrying assessment of the state of Northern Ireland’s economy made by Michael Smyth, senior lecturer in economics at the University of Ulster, who believes that while public expenditure in Northern Ireland is set to expand over the next 18 months, it is difficult to envisage significant rises in spending thereafter.

“The Northern Ireland economy has reached something of a tipping point,” said Mr Smyth.

“Direct rule ministers have reminded us how much the Northern Ireland economy depends upon the public purse and that local taxpayers will bear an increasing burden to support improvements in local services and infrastructure.”

He added that “personal incomes and spending will continue to grow, but will also be hit by the introduction of water charges and higher domestic rates – something business owners in particular will need to bear in mind”.

Throw in the strong possibility that the Irish Republic’s economy, which is a major market for northern goods, is also heading for choppy waters tougher times could lie ahead for all on this island.

  • seb flyte

    It is curious, or perhaps symptomatic of the absurd navel gazing of those who frequent this group, that no-one has commented on this thread while rushing in to gossip about some gossip relating to RA spies and which loyalist has been murdered.
    The entire Norn Iron edifice is propped up by long-suffering British taxpayers whose wishes for disengagement has been ignored for the past 30 years – in fact this may be a significant underestimate.
    Your navel-gazing will eventually result in your economic freedom to support yourselves when the tories repudiate their unionist tradition. My forecast is 2017.
    Enjoy while you may.

  • Garibaldy

    I think the reluctance to discuss this is that it is (a) less interesting than who has just been shot, or spot the informer and (b) there are all sorts of additional figures that would be necessary to make sense of this argument, so people shy away from it. For example, how much, if any, of this rise in public spending is due to Iraq? Has the proportion of public spending relative to overall output risen due to increased spending or decreased economic activity?
    and (c), and perhaps more importantly, we all benefit from it, so who cares? We’re all Kensyians still, as Nixon might have put it.

  • Crataegus

    Some have said be careful as there may be an economic down turn in the South caused by over borrowing and increasing interest rates. The underlying trend is now for increases, interesting times ahead.

    seb flyte

    With regards NI economy most people believe that there needs to be a radical approach taken to the Public Sector here, but the problem has been created by the mismanagement of this place for the last 30 years. Only those employed in the Public Sector defend it.

    To bring the Public Sector here back in line with the UK average requires cuts of about 20% max. so it is not as out of line as you may think and other regions may well be worse. Believe me it would be extremely easy to achieve savings in some sectors. The nub of the problem is Departments that have been unaccountable for decades, the daft fragmentation of departments to create ministries, and the many buy offs etc to one side or the other.

    We are about to commence the political reorganisation of the councils which is likely to increase inefficiency.

    The net effect is that the business sector is ignored and is about to be penalised because of others profligacy. Net effect people are investing elsewhere.

  • Alan

    You don’t improve the economy by cutting public spending, you can work to reduce it as a % of the local economy, but as we’re talking tax-take that in itself is problematic.

    We have to look at the structural imbalances in the economy – look at the safe decisions being made by most graduates – medicine, law, other professions. We need to shake up that system a bit. Instead of grammar schools boosting the professional ( predominantly public funded) classes, we need to find a way of producing hungry entrepreneurs.

    Maybe ending academic selection might just push a few more of them through the system.

  • lib2016

    Unionists continually refuse to engage in any realistic discussion of the future and prefer to engage in endless personal attacks on Sinn Fein personalities. It’s just too easy to sink to the same level and I’d be the first to admit that I give into tempation far too often.

    The Brits are leaving. What incentive is there for them to introduce real economic change?

  • Garibaldy


    i’m not sure that most people do want a ‘radical approach’ (codeword for savage cuts) to the public sector. I don’t see any evidence for it, unless you count the odd businessman and academic. And i think there are numerous reasons why investors tend not to chose NI, which have next to nothing to do with the percentage of the economy that is supplied by public spending.

  • Garibaldy


    The Brits won’t be leaving any time soon, because there’s no sign of a nationalist majority for decades. So they’re trying to retrench to save money, now that they’ve managed to calm down the violence.

  • I see that since the last time we met – a monastery outside Marrakesh, from memory, or was it Tangiers? – Seb Flyte’s grasp of economics hasn’t come along any too far. Of course gross public spending damages rather than helps an economy. For the very simple reason that it displaces private money. Evidently all of you who haven’t grasped this point have never actually trying working in the sodding market place. Less public money spent in NI would be a jolly good thing. Start first with Stormont: shut it down and reduce Marty McG’s civil service pension while you’re at it. Palm him off with an MBE or something.

  • lib2016


    Compare the assumptions made in the 2001 Census about the school population with the facts now emerging about the numbers of children from the Catholic population who attend state schools. Unionists have made no attempt to encourage Catholic identification with the state or even Catholic involvement with the unionist parties. Too late now for a deathbed conversion – unionists have opted for the DUP and a swift end to the NI entity.

  • kensei

    “Only those employed in the Public Sector defend it.”

    That’d be about 70-odd percent of the economy now then. That figure is truly eye popping.

    “Of course gross public spending damages rather than helps an economy. For the very simple reason that it displaces private money. Evidently”

    Unlss of course, there isn’t enough private sector money to go around, and then we get what is called a depression. Balance is needed rather than ideology.

  • Garibaldy


    I suspect lots of those who send their catholic children to state school are not strongly nationalist, and their children will be less so. On top of that, there’s a good chance that in any referendum, many people who vote for nationalist parties will not vote for a UI whn faced with it as an immediate prospect. When you throw in Alliance as well as all the various unionist parties, there remains a large unionist majority that will take decades to die out.

  • Ciaran Irvine

    The Brits are leaving. What incentive is there for them to introduce real economic change?

    Because it would be far simpler for everyone concerned if the British were to hand the north over to the Republic in some sort of half-decent shape. Doing something to fix the economy and tackle ingrained sectarianism in society would a) make life in the north a bit more pleasant in the interim b) help to defuse partitionist scaremongering in the south c) reduce the lure of paramilitarism by providing jobs and hope for the future in deprived communities and d) let them run away loudly proclaiming that they have finally “civilised the warring Irish tribes” and that long-suffering Mutha’s mission is now complete. And e) – if they did all this and support for the Union rose, well then we might not have a United Ireland but at least one third of it wouldn’t be a lunatic parody of itself.

  • lib2016


    Let democracy decide. There is no doubt that our children’s idea of a UI within a strong EU will be hugely different from traditional ideas on either side.


    The problem for the Brits is keeping the unionist population quiet and it was the unionist population who built their whole economy around the state funded security industry. Nationalists benefit only by chance but Hain has made no secret that British generosity will not continue forever and the Northern economy has to change.

  • Ciaran Irvine

    lib: The Brits have been funding the north since the 1950s. Was it Wilson or Callaghan who called them “spongers” and muttered Something Must Be Done? They’ve been talking about tackling the subvention for 50 years!

    Either the true sum involved is insignificant in British eyes so they don’t care; or they feel it is well worth it because they achieve some important goal through it; or it’s deliberate policy to keep the north dependant on Mutha’s goodwill. I can’t think of any other explanation for the startling inaction, consistently over decades. Apparently the dependancy has got worse in recent years with public spending now over 70% of GDP!

    Someone, somewhere is telling porkies.

  • Brian Boru

    I think revelations such as this can only make the mainland UK population ever more resentful of the Union with NI and longing for the day when they get shot of the 6 counties.

  • michael

    its quite sad that a conversation about economics should come down to emotional feelings about nationality. Im a nationalist, untill relativly recently (2 years or so) i probably would have voted no on a UI referendum due to the economic argument, however valid or invalid that may have been. But it is now clear that a UI for economic reasons is def something to look at. Im not saying that it would def be of benifit, but perhaps a proper long term assesment of how it could be done and what economic benifits (if any) would be achieved.

  • michael

    whoops! that should finish off,

    would be a good idea.

  • Crataegus


    I do think there is an underlying desire to see good services delivered efficiently. Some rationalisation is needed and we need to move in a planned and systematic manner rather than suddenly slamming on the brakes.

    With regards investment moving elsewhere, over governance and slow delivery of services are reasons that hinder investment but as you say there are others.


    You don’t improve the economy by cutting public spending,

    You do if there is pretty well full employment and staffing problems in many sectors.

    You make some interesting points about education and I agree there is a major problem. The was an interesting interview on Hard Talk with the shadow minister for Education about Education in Britain and up ward mobility in society. Some interesting statistics; since the introduction of Comprehensive Education the percentage attending Oxbridge from state schools has dropped from over 60% to under 50% and the bulk of those are from the Grammar schools. Also your chances of Oxbridge state versus private is 27 to 1.

    I am not a great fan of selection but I would like to see an inclusive system that is well though out before we jump.

    Another problem with creating entrepreneurs is access to funds. By chance I ended up in property because on a trip to the bank I found I could borrow against property assets but getting money for manufacturing or commerce generally was a different order of problem. So rather than waste time I adjusted to suit the environment.

    On the 70% no one can defend figures like this and it is in the interest of all of us to increase the private sector. It should be a political priority.

  • Garibaldy


    efficiency yes, cuts for the sake of it, no.

  • Crataegus


    I think we agree there. Everyone talks of cuts but many of the Services are essential so the possibility for savings is limited. However there is an argument for making many of the tasks Council run. I have always found Council Services more efficient than their Governmental nearest equivalents and currently in many fields there is duplication, fragmentation and lack of clarity as to which set of conflicting requirements has primacy.

    I have more than my fair share of dealings with various government bodies and in some cases it would be relatively easy to provide a good service more efficiently. Recently we had a bit of a laugh at the expense of Rooker, but in truth he was in charge of a Department that is virtually dysfunctional, it is every bit as bad as the Home Office. There are good people in the DOE but the system they work in is perverse and unclear.

    In NI much inefficiency is due to lack of clear political direction the hidden cost of the non functioning Assembly is colossal.

    On the cutting end I think there is a need to review the financing of the whole Community and voluntary sector so as to ensure long term viability and that the funding fits in with some clear policy.

  • Garibaldy


    I agree that the political agenda is hampering things. I’m not sure about the councils – not my experience of them, and the privitisation of services I don’t think automatically leads to improvements, especially in public services. Look at Railtrack, and many of the hospital cleaning services etc and MRSA.

    The DOE might well be too large. A culture of effiency needs to be encouraged within the civil services, but I’d like to see large numbers of efficient civil servants than only a few

  • John East Belfast

    They are disheartening figures for anyone who wants to see NI develop a culture of enterprise and wealth creation.

    However as previous posters have pointed out it also has a lot to do with NI’s small population and how we go about delivering UK standards of Health, Education and Social Services to the same.

    We have a whole range of esential services which are effectively being administered locally which is distorting the local labour market.

    eg why should my wife’s teaching wages be processed in Londonderry ?

    Therefore with us having effectively full employment we have had to pull in 12000 Polish workers, among others, in the last three years to fill private sector jobs.

    What we need to do is outsource a considerable amount of Back office Civil service Jobs back across to GB or even to somewhere like India.

    Yes we need teachers, nurses, policemen etc on the ground – but a lot of the rest should be outsourced freeing up employees to work in the private sector hence reversing these % while at the same time maintaining the service.

    With IT and Telecoms many of these administrative type jobs could be done somewhere else.

    The only alternative is to dramatically increase NI’s population.

  • Garibaldy

    This notion of full employment, or near full employment, is somewhat baffling to me, given the high proportion of people unemplyed in NI. Granted this is partly because of the number of people doing the double or living off the DLA, but there is chronic and serious unemployment in NI.

  • crataegus


    With regards Council Services, core tasks are generally done well. Bins get collected, grass is cut etc. Where you run into problems is council initiatives and one of projects.

    Eg. Building Control; if an Architect submits plans for me quite often they are back with him approved within a couple of weeks. Structural calculations, details, drainage etc all checked. Same application goes into the Planning Service six month later no progress and when it eventually is approved you find that the coordination between the various parts of the DOE was done by your Architect and not the Planners. I have been at meetings with Architects and Planners and agreed amendments to later find the Planning Service requires further changes or completely rejects or wants us to go back to the first design. There is absolutely no consistency it is virtually a lottery. The fees they charge to keep themselves in a job are ludicrous and the service atrocious. My experience others may disagree) Why are there more planners in many areas than Building Control Officers bearing in mind BC visits the sites during construction? BC clearly has more work per application. I think there is major opportunity to remove many of the petty applications from planning by amending the Building Regulations to cover issues of over looking etc. Also I would transfer Health and Safety Legislation into the Building Regulations and have the Council co ordinate ALL activity on site. You would get rid of one Department and significantly reduce another by doing this. Then there is the Roads Service! In my opinion at least the Development Control section of Planning should move to the Councils along with Roads maintenance, social housing etc. The politicians here simply have to be given responsibility and be liable to prosecution if they fail to deliver.

    I’d like to see large numbers of efficient civil servants than only a few

    I am not a fan of privatisation or subcontracting out. My observations of cleaning in one of our Hospitals would suggest that the profit motive is not the best approach. I run a business to accrue wealth. Many of the Services require a different ethos. They are there for our common good. However I would like to see them run efficiently and the fewer people they employ the better. Efficient Civil Servants who are not required would be more benefit in the Private Sector. We also need to ask are some of the Services actually required and should some of the Departments be merged, should we be funding parallel education systems; what structures are required for a population of less than 2 million?

    With regards unemployment several reasons;
    1 No skills.
    2 Don’t want to work because it isn’t worth it. Low income, take away the cost of travelling to work etc and you are probably working for nothing. My view on this is it is not society’s problem, but the employees. It is up to he/she to re-skill to increase their earning potential. Our responsibility is to ensure there are the training opportunities and to do this right require more than a few night classes.

    I guarantee you had to do community work 3 days a week as a requirement to get benefit the unemployment figure would virtually disappear. There are shortages of labour in many sectors, hence the immigration.
    3 The double. Much reduced but still there.
    4 People who are genuinely ill or can’t work because they are caring, generally these people need more support.

    Sorry big subject and rambling.

  • John East Belfast


    “I am not a fan of privatisation or subcontracting out. My observations of cleaning in one of our Hospitals would suggest that the profit motive is not the best approach. I run a business to accrue wealth. Many of the Services require a different ethos.”

    I really dont see how the customer(Hospital Trust -requiring high standards at best price for tax payer) tendering its cleaning requirements to separate cleaning firms (in competition with others)trying to make a profit whilst delivering high standards at the best price for the customer – is a problem for you ?

    What other ethos will deliver the optimum ?

  • PaddyReilly

    Interested to hear that there will not be a Nationalist majority for decades.

    In the 2004 EU election, the Unionist majority was an average of 1,667 per constituency. Thus it only requires the Unionist vote to go down by about 800 per constituency and the Nationalist to go up by slightly more for NI to return a Nationalist majority.

    In England, this sort of change occurs at every election. In NI, for ethnical political reasons, there are almost no swing voters, but the general tendency for the last 40 years has been for the Nationalist vote to go up, and the Unionist to go down. So one would expect the 2009 election to be too close to call, but the 2014 one will definitely return 2 Nationalists to 1 Unionist, and be followed shortly after by the dissolution of the state, if the provisions of the GFI are adhered to.

    You may choose not to believe this, but I am reminded of the words of a 1970s song called Rubber Bullets..

    There’s a rumor going round death row, that a fuse is going to blow..

  • Garibaldy


    the turnout for any referendum would undoubtedly be much higher than normal elections, particularly among unionists seeking to protect their status within the UK, so those results don’t reflect the reality of the numbers of the ground. Add the votes from the two big unionist parties, Bob McCartney, PUP, etc and I suspect the vast majority of Alliance and compare it to PSF and SDLP, and the WP and perhaps a few independents, and you get a truer reflection of reality I would say.

  • Garibaldy

    John East Belfast,

    The fact is that the privitisation of hospital support services has been a disaster, as have several other privitisations. This happens most where people are most dependent e.g. transport, where safety measures cut into profit margins. There are many areas that should be run by the government in the interests of the the collective rather than a few shareholders.
    Although in fairness, my perception of these areas would be more inclusive than most.

  • kensei

    “What other ethos will deliver the optimum ?”

    What’s the optimum. The cheapest, or cleaner hospitals? Money, or control over hiring and firing?

  • Ciaran Irvine

    Crataegus, on the unemployment, I can only speak for Derry, but in that city at least wages outside the civil service are ridiculously low. Atrociously low. I know plenty of people with degrees and a good few years experience – some of these in technical and engineering fields – who are working in Derry for usually about £12K. Unskilled and semi-skilled jobs generally get £7-10K. Graduate starting wage is usually £9/10K. One friend, a design engineer in his mid-30s with 14 years experience in his field, was recently overjoyed when he landed a new job with another company. At the massive salary of £16K. He could earn more than twice that in Galway.

    Is it any wonder half the city weighs up their options and thinks “Hmmmm. Work for some asshole boss 40 hours a week for £200, or claim everything I can and when you include rent paid for I could be on £120+”

    Anecdotal evidence from the Republic suggests that in the late 90s as the Tiger really got going, there was a cultural shift where private sector jobs were seen as more interesting, challenging, exciting and well-paid, and State posts were for losers. Young people avoided the civil service, and many civil servants left their secure posts for industry. A few years of that in the north, and the economy would probably balance itself out. But the private sector has to be seen as more attractive than the civil service first. Which means paying people decent wages.

  • PaddyReilly

    Here again we have the Unionist argument that even if the Nationalist vote does exceed 50%, they will still fail to win any referendum, due to a combination of previously non-voting but suddenly interested Unionists, and Nationalist voting but UK orientated Nationalists.

    Projections that involve the whole of the Alliance vote pitching for the Union are a little optimistic: in EU elections, approximately one third transfer their votes to the UUP, one third to the SDLP, and one third do not transfer.

    The PUP got 8032 votes in 2003 and have not stood since: I can’t see how they are going to alter anything.

    But suppose this does happen, what we would be left with would be a Nationalist controlled 6 county province within the UK. Under such circumstances, we would expect that this government want to foster island wide institutions, that involve Northerners moving South, and Southerners moving North, and generally foster hibernian integration, at the expense of United Kingdom orientated institutions. Which one would expect, would cause the Nationalist majority to rise even faster, and rapidly reach the point where a referendum result on unification would be positive.

    So this is where the so-called Soviet Unionism will come into play. In a province where most of the employment comes from the state, facilitating national integration will be so much easier.

  • Garibaldy


    you’ve misinterpreted what I said, which is that the figures you cite underestimate the actual gap between currently voting nationalists and unionists. I don’t see how this is a unionist argument. I based my comments on any referendum on the referendum on the GFA, which got a significant majority because people who didn’t normally vote turned out. When they returned to old habits, Trimble suffered death by 1000 cuts.

    As for the argument that the economic role of the state might foster integration, it’s certainly possible, but would require a sea-change in the attitude of the political elite and many voters down below, to accept that they should pay for all these jobs up north. But in such circumstances, who knows?

  • Ciaran Irvine

    the referendum on the GFA, which got a significant majority because people who didn’t normally vote turned out. When they returned to old habits, Trimble suffered death by 1000 cuts.

    Yes, but is there any actual evidence that those missing voters were actually Unionists? I know the UUP believe they were, but is that based on anything concrete? Is it not equally likely that they are largely agnostic on the Border (or fed up with the whole issue) and simply turned out for the GFA referendum to vote for Peace?

  • Garibaldy


    Apart from the failure of pro-agreement unionism and falling participation rates at elections, I suppose not. Although I haven’t (and never will I hope) go through this on a constituency or ward by ward basis to come up with more more evidence as to their identity. Hopefully somebody will, or may even have done so already.

  • Ciaran Irvine

    Although I haven’t (and never will I hope) go through this on a constituency or ward by ward basis to come up with more more evidence

    Hehe. Political anoraks we might be, but at least neither of us is that bad. Yet 🙂

  • Garibaldy

    Isn’t that what masters’ students are for, this type of donkey work? Surely the QUB politics department could sort this out.

  • Crataegus


    I have a number of employees and I do bring people in to do specific tasks.

    If I want a building designed I appoint an Architect, QS, Engineers etc. I don’t employ an Architect as a member of staff to do the work, wouldn’t have the work to keep him fully employed. But conversely if I want secretarial work done I don’t contract this out unless it was something quite exceptional. Accounts (book keeping) would be done in house but an Accountant would be employed to put a bit of polish on the figures.

    The problem with contracting out or employing consultants is it works if the additional work to you is minimal and their task is clear and easily defined. However if you have to draw up all sorts of complex contracts and schedules and then have to monitor or have to constantly check claims for variations or amendments to those contracts the administrative burden makes the exercise pointless. Imagine you identify a problem, you have to ring them, confirm in writing, they have to come out to rectify, you have to check they have and perhaps invoke a penalty clause etc. etc. etc

    For me cleaning in a hospital is utterly fundamental and in the case in question it simply wasn’t being done to a standard that I thought acceptable. Obviously the work was either inadequately specified or the supervision was inadequate. Having some underpaid scrubbers cutting corners may be a false economy. If you have your own cleaners any senior member of staff can tell them to get up and sort it out NOW.

    With regards ethos sometimes the competitive market dogma doesn’t necessarily give the best returns. If you can build a team spirit and pride often you get better results than if you split everyone up.

  • Crataegus

    Ciaran Irvine

    there was a cultural shift where private sector jobs were seen as more interesting, challenging, exciting and well-paid, and State posts were for losers. Young people avoided the civil service, and many civil servants left their secure posts for industry. A few years of that in the north, and the economy would probably balance itself out. But the private sector has to be seen as more attractive than the civil service first. Which means paying people decent wages.

    There are several factors that influence wages, suitable skills, supply and demand of Labour and being able to earn enough to pay people. You can’t pay what you don’t have. I think you would first need an environment here where we prioritise business needs in order that that sector can grow. It is about enabling businesses to make profit and ensuring they invest that profit here. Do that and you may get some buoyancy and better attitudes?

    I know what it’s like to be badly paid and have no money and I do sympathise, its hard to break out of and the student loans etc don’t help. The person on £120 + for doing nothing is making a rational decision, but it is a short sighted decision. As a society we need to minimise such activity for the £120 is need elsewhere.

    If the wages are double in Galway move there it’s that simple. Crazy not to.

    I have to move further and further a field to make a living, and business travel is hard going as you have a fair amount of homework to do. If I am to borrow money to invest in building the risk in Ireland generally has increased and the ability to make profit decreased. Too much reliance is now being put on the increased value of property rather than the rental return against the cost of financing the build cost.

    Last year in India the economy grew at 9.3%, massive growth potential, massive potential home market, very competitive labour costs, even with its legendary administration it is lot faster to get projects moving there than it is here! Then there is China, personally I wouldn’t touch the place, but their government is up to its neck interfering in the market ensuring that its businesses succeed. We are in direct competition with these countries and although there isn’t a free movement of Labour investment is moving out of the developed countries. What worries me is the world economy is reliant on US consumption and trade imbalance.

    We need a stronger, more self reliant and sustainable economy in both parts of Ireland.