Public spending cuts, the ticking time bomb that will jolt the Executive into reality.

For Northern Ireland, look beyond the small giveway in the budget statement to the public spending time bomb. The Financial Times spells out a UK position far worse than a few months ago.

This means a fierce and progressive squeeze on public spending is in prospect after 2010, with health and education – the government’s top two priorities – enjoying vastly lower rates of growth than in recent years, and other departments facing actual cuts….Alistair Darling, the chancellor, has cut allocations that would have seen public spending rise by around 2 per cent a year in real terms after 2010-11 to 1.2 per cent. This would start with a rise of 1.3 per cent rise in 2011-12 and of 1.1 per cent by 2013-14

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This average 1.2% public spending growth is less than half what NI has been used to and will enjoy for a couple of years yet.. And that 1.2% average must pay for the fixed rates of the extra costs of higher unemployment, leaving precious little extra for much else. This creates an even bigger headache for the Executive caused by the rates freeze and postponement of water charges, however popular they may have been.

What on earth are they going to do? Put their fingers in their ears and scream? A gradual rates rise and an effort to take the water company off balance sheet are among the better choices. Economic commentator John Simpson is surely right,

The Executive needs to agree that direct water charges should, gradually, replace the £200m subsidy.

Messrs Robinson and Dodds must speak out soon. Wishing the problem away isn’t an option any longer.

  • Pete Baker

    Brian

    “Wishing the problem away isn’t an option any longer.”

    They’ve already wished it away for another year..

    Do they realise that any extra spending ain’t going into the Assembly’s coffers?

    Probably not..

  • runciter

    an effort to take the water company off balance sheet

    How would this sleight-of-hand benefit the public – when it is obvious that the cost of provision must be paid either way?

    And Simpson’s article is a bad joke. Where will all this magical ‘revenue’ come from to replace the public subsidy? Outer space?

  • Blue Rinse Brigade

    Brian,

    You have hit the nail on the head.

    While economic necessity left the Chancellor with little choice than to take down his public sector growth figures, that will go down like a lead balloon in NI.

    The days of the FM and dFM swanning off to London to beg Sir for more are most definitely over. They shouldn’t even bother making the same type of journey once the Tories come into power.

    Part of devolution is that you must work within the limits which you are given. No amount of yapping can, will or should change that.

    Now is the time for responsible devolved government. Sadly, it would appear that the local powers that be don’t have the political bottle or economic nous to truly psuh this part of the UK forward without running to Westminster at least once a year.

  • dub

    McGimpsey’s abolition of prescription charges was an act of lunacy…

  • Mick Fealty

    Run,

    Where it comes from in England: ie, the rate payers’ pockets… There is going to be pain somewhere; just look at the way spending on the PSNI has already overrun in the first part of the year…

    That said, I doubt it will happen. Devolved parties will scrabble all over each other to avoid raising local taxes unless/until it is forced upon them by Westminster…

  • DC

    You only have to look at where the two parties came from and how they rose to power to see that at the moment they are both ill-equipped to deal with innovative governance that is required in a deep downturn.

    Leaving aside the problems with big bulky two-bloc thinking re unionism-nationalism veto neither of these parties made any electoral headway out of half decent socio-economic arguments.

    Is it any wonder McGuinness and Robinson have been stalling. They have little in the way of a forward agenda apart from claiming victory in the way of getting more money off Brown to plug immediate shortcomings. This is to save face in lieu of good thinking – which in NI political terms has been AWOL for 35 years.

    New political life here will require more inter-agency thought on improving the public sector’s regional performance, which is a whole new political psychology because it is about how to set and then make change in a motivating way.

    Personally, I find McGuinness and Robinson deeply depressing one with a sticky kind of dry voice and the other Robinson with a sickening rasping one. Ughhh. If I could hasten to add too, Adams never took dFM position because he has proven time and time again he really isn’t ministerial quality at all, just some sort of superior republican moraliser and grand ideologue (or so he would have us believe).

    The truth is obviously more apparent to those not in hock to republicanism and the southern election showed him up pretty much as a dud in terms of having anything that really matters and of lacking any quality in today’s political climate.

  • Comrade Stalin

    Personally, I find McGuinness and Robinson deeply depressing one with a sticky kind of dry voice and the other Robinson with a sickening rasping one.

    Surely Jim Allister’s raspy voice has got to be the worst, especially when it’s on the Nolan show.

    Agree with the article – it’s time for the politicians here to start taking responsibility. It does leave me wondering what the cut in VAT is going to do to the NI subvention. Normally, when there are increases in tax, we see a corresponding increase in the subvention; does the VAT cut mean it will automatically decrease and therefore reduce Dodds’ available budget further ?

  • DC

    Yes Jim Allister is out there in a league of his own but it is interesting how they all seem to sound the same.

    The only problem for Allister is that he relies on SF for coverage, just like the DUP did in relation to the UUP’s handling of the process back then. But when you rely on a particular party for promotion you usually are met with the consequences of actually bringing that party in with you as it repsonds accordingly.

    It is this interlocking strategy that gives unionism and nationalism traction, like a wall on which a person runs up and back flips off – scoring high points for a good performance.

    Remove the wall and no one takes any points.

    So in a nutshell I don’t think much of the TUV’s strategy same way i don’t think much of the DUP, particularly after having witnessed 8 years of anti-agreement, belittling the PSNI with harmful attacks on change only for that party to take up where the UUP left off; in the end with very very little changes to that GFA substance. The substance was something over which the DUP had a big big disagreements…apparently.

    In that respect I do have some sympathy with Allister in that – yes – people and followers of the DUP were duped by an extremely egotistical curator who himself was the same as Adams in that he only lasted one year because he too was out of his depth when a top minister. A political one that is.

  • Glencoppagagh

    None of the local political parties are going to seriously tackle the public sector monster. They’ll try anything to avoid it like the ludicrous campaign for a 12.5% corporation tax to “kickstart the private sector”.
    They won’t be able to deal with any cut in the Westminster subvention. For this reason alone, Stormont’s days are numbered.
    I see that Dublin seems to be preparing to get tough with the public sector. If it comes to something substantial, I could be a nationalist convert but it might be deeply discouraging to the very numerous public servants of a nationalist persuasion.

  • Sneakers O’Toole

    Willie McCrea has the voice of an angel.

  • DC

    Glen – the best way to tackle child poverty for example is to get into consultation with the Unions and re-evaluate job descriptions in the public sector – stripping down higher grades of pay thus encouraging the higher paid (with more economic mobility) to seek private sector work, or look to create it.

    It is those on the lower pay scales or spines who are least likely to be able to make a switch into the private sector given the nature of their terms and conditions which could be based on family / part-time work and dependent also on qualifications.

    There could well be a high amount of graduates in the civil service not doing graduate level work and not getting paid at that level. Perhaps in middle management.

    It’s time for some redistribution with a view to incentivize a switch out of public sector mediocrity and in to private sector wealth creation.

    However, this will require some seriously tough negotiation and even tougher decision-making, especially as to the legalities of it re contract law etc. But to me it doesn’t make sense the private sector cutting jobs to market conditions whereas the public sector is part and parcel of encourage that private sector stagnation.

    Something has to give – there needs to be ch ch ch changes.

  • Driftwood

    Will the civil servants get their £100 million ‘back pay’?

  • Driftwood
  • Glencoppagagh

    DC
    The minimum starting point should be a universal and indefinite pay freeze in the public sector (pay cuts would be preferable of course but politically too difficult) so that private sector pay can catch up, move ahead and remain ahead.
    It is utterly preposterous that people who bear virtually no economic risk are more generously remunerated than those whose livelihood is more precarious.

  • Glencoppagagh

    Driftwood
    “Will the civil servants get their £100 million ‘back pay’?”
    I hope not

  • frustrated democrat

    It is time for the politicians in Northern Ireland to stop holding out the begging bowl looking for more money and start to manage what they have.

    The ludicrous give aways such as free prescriptions and travel for over 60’s have to stop and the money spent to bring new jobs in the private sector.

    We therefore need to spend whatever money we have in encouraging jobs in new and expanding local companies and not by blanket tax reductions to all companies. Invest NI costs £40 million a year to invest about $120 million, this organisation needs to be slimmed down and the resulting savings invested back into industry.

    We are in a recession and everyone needs to understand that we must accept that standards of living will have to fall as we pay back the profligacy of the past years and start investing to turn the situation around.

    A dose of economic reality needs to be poured over everyone here, especially the politicians, before we can start to move forward.

  • DK

    Savings to be made… first up against the wall are the cultural things:

    Festivals; art; minority languages.

    Then the avoidable costs:

    Enquiries; re-organisations

    Then stop the cost increases:

    Public Sector pay; existing funding capped

    Then the cuts begin:

    Council services; public sector reduncancies; benefits

    Finally, income is raised:

    Water rates; tolls; council tax; prescription charges.

  • “The ludicrous give aways such as free prescriptions and travel for over 60’s have to stop and the money spent to bring new jobs in the private sector.”

    I despair sometimes at just how small minded people can be, I find it amusing that so many of you good christians are prepared to sell gods bounty i.e. water to the highest bidder, as if it is something that can be dealt with in a such an unchristian manner.

    Perhaps instead of telling your politicians what public services they should cut, you should ask them why they sat out the boom years, bickering with one and another.

    Only an idiot advise a politician what to cut, for make no mistake whether it is Brown or Cameron they will be well ahead of the pack with hatchet in hand, if you keep calling for cuts you may get more than you bargained for.

    By the way, am I the only one to find it amusing that those politicians and columnists who sat quiet whilst GW Bush ran up an enormous deficit in the USA, are amongst the loudest when Brown does something similar.

    I wonder if it may have been because when Bush ran up his deficit, the cash went into the pocket of the top earners or the corporations many of them worked for.

    Yet you still listen to these’s creeps trumpeting, aint folks strange.

  • George

    Taking away the free bus pass would be political suicide and the height of stupidity. It costs a pittance of the 16 billion budget anyway. Much much bigger cuts are needed.

    Certainly looks like there will be no Maze stadium and no refurbishment of Windsor Park until 2017 at the earliest. As for money on culture, forget it.

    Hospitals will have to close, schools will have to go, community schemes will have to be wound up, thousands of public sector jobs will have to go, the number of MLAs/councillors will have to be reduced, policing will have to be curtailed, quangos culled, council taxes will have to rise, water charges introduced, parking levies everywhere, tolled roads, high bin charges, increased tuition fees, plastic bag tax, higher airport taxes.

    On top of that Westminster will cut the subvention and increase income taxes for the next decade.

    It’s all coming down the tracks and will be with the people of Northern Ireland for at least a decade.

  • frustrated democrat

    Mick

    You may think we should live above our means and provide free things to people who don’t need them, prescriptions were already means tested and I see many rich working people getting their bus passes at 60. – I don’t.

    I have always believed in a ‘small’ government and that we should at all times be fiscally prudent so we have the reserves to get through the bad times and that we should invest in what will generate funds in the future e.g industry. So no, I am not calling for it now I have been since the 1960’s and no none has even got close, even Margaret Thatcher failed.

    When all things are added together, including Pensions PFI etc. etc. this country has apparently liabilites of almost £3 trillion not £1 trillion or £100,000 per employee – do you really think that is sustainable?

    No, we need to cut and cut sharply the money that is being spent and often wasted by government, and only spend what we can afford on tax cuts.

    Some day a politician will actually cut the civil service before we all become civil servants and spend our time administering each other.

  • Frustrated democrat

    The problem is, as I am sure you are aware, we do not live in a perfect world. If State bureaucracy is to be cut the time to do it is during a boom period, to do this now would surly help undermine any economic revival and throw tens of thousands onto the unemployment register.

    Despite being a lefty, I have a great deal of respect for the former German Chancellor, Konrad Adenauer, who at the end of WW1, as Mayor rebuilt the economy and infrastructure of the city of Koln; and after WW2 that of West Germany. He believed times of grave economic crises were the only time governments could justify borrowing large sums and thus taking the nation into deficit and remember he was a very conservative man.

    Having experienced first hand three of Germanys major economic disasters. After WW1, 29-33 and post WW2. he understood better than most the social consequences of a massive recession and came to regard balancing the books at such times as secondary, social cohesion must have priority.

    imo this is something the Cameron Tories are totally ignoring, I fear because they have no collective memory going back further than 1979. What I am saying is that a massive economic crises is about much more than the economy and the size of the budget deficit. To his credit Brown does seem to have understood this, in truth any politician with an iron hand can balance the books, the question people need to ask is do they wish to live with the consequences of such an act.

    Perhaps some people need to get the history books out and take a look at the dire consequences when governments in the 1930s balanced the books.

    Best regards

  • frustrated democrat

    Mick

    I think the sight of Brown throwing the ball looking for a 00 on the wheel was surreal. What he was saying I have a 1 in 40 chance of winning the next election and I’m betting the country’s future on it. I think the odds have lengthened others disagree, but the overall position of the UK is very poor and we are rapidly becoming the sick people of Europe.

    Sadly I don’t think the VAT will do what is required the 2.1% discount probably won’t get passed on, £1.99 will still be £1.99 not £1.95. An increase in the basic allowances could have done much more and would have put money in taxpayers’ pockets to do with as they pleased.

    However I just don’t think borrowing is the right way to go. We need to cut expenditure in other areas if we want to fund tax give aways which I do agree with, I always want lower taxes for everyone, or even other more relevant expenditure.

    In a couple of years we will know who is right.