Spotlight have last week’s programme up on line. Beware though, I could only get it to work on Internet Explorer. Good idea, well done. Mike Smyth, it says, has the toughest assignment: arguing that Northern Ireland could become economically independent. Fine start though: “Northern Ireland is the grumbling appendix of the United Kingdom. First of all because it gives the host pain and grief from time to time. Secondly, nobody really knows what its purpose is. And, thirdly, as you know, at some point in the near future it will have to be removed”.Northern Ireland is currently sitting at 20% below average UK income levels and has a structural deficit of £600 million pa and rising
But it is possible, he argues, to emulate the Republic with economic independence. He notes that in 1982 “Alan Dukes, Minister of Finance had to admit to the Dáil that 30% of the taxes he had levied were going to pay foreign debt. It was only the emergence of a policy consensus to cut public expenditure, close hospital wards, sack teachers that laid the foundations of what became the Celtic Tiger. The Republic is now one of the wealthiest countries in the developed world”.
His case for independence rests on low taxation and prudent, long term international borrowing. “A negotiated, managed, phased withdrawal from the Union over five to ten years can give us the breathing space to bridge the gap”. That would allow a cut in corporation tax to a level just at or below the Republic’s rate, which he believes would become self financing within fifteen years though increased Foreign Direct Investment leading to higher wages, higher tax paying jobs.
Crits from judges: too focused on the importance of foreign direct investment, and ignores the importance of the services sector and in the start up of small business. Need to create a vibrant entrepreneurial spirit, not jobs per se.
Next up. Frank Barry. Points up the advantages of integration to a greater extent with the economy of the south, although it is predicated on the political conditions remaining the same, and receipts from the subvention remaining. It is not a case for entrepreneurs of it being either north- south relations at the expense of east-west relations. If they are good they recognise opportunities globally, whether in the UK, Ireland, Europe or the US.
The sectors involved in the Republic’s prosperity are ones in which geographical peripherality is not an issue: ie where transport costs relative to the value added are insignificant, which includes financial services or commuter software, which are transported over the Internet. But he argues that there could be a marriage between NI’s traditional heavy engineering, and educated labour with the Republic’s high tech sectors.
Successful further integration will depend on successful updating of infrastructure. Funds are being made under the Republic’s National Development Plan to improve in parallel the road connections between north and south, partly to improve the Republic’s border regions and reduce their own peripherality.
Crits from judges: No mention of the government subsidies available to the south and the low rate of corporation tax. But he disallows it happening in Northern Ireland. Also doesn’t address NI’s lack of investment in R&D, particular in its traditional engineering base.
Graham Gudeon with the case for Northern Ireland inside the UK. NI has done remarkably well inside the UK. In particular it draws great strength and stablity from the huge amount of resources put into the public services from the London exchequer. Fastest growing regional economy within the last fifteen years. Similarly far better on job creation than another region – 1/4 million jobs in the last 20 years. Unemployment below the UK average, and half the European average. Cost base is low, education is high.
He also points to the value of the subsidy – £6 million or three thousand pounds for every man, woman or child. He reckons it would require a doubling of income tax. Productivity levels are low, which he believes could be achieved with lower profits based taxes.
Crits from judges: Brown won’t give on UK wide corporation tax – it would be easier to gain outside UK. No point in having a regional assembly, if there is no economic powers.
Judgements: Lorraine Sweeney (UIE), Denis Rooney (UIE), Lord Rana (INI), Gerry Robinson (UIE).