Practical visions of north-south

With deadlock and blocking being the dull keynotes at the macro level of the North-south institutions, political scientist Elaine Byrne’s view of practical cooperation in the Irish Times provides a cheering note. Even more worth noting was George Quigley’s grand overview of 10 years of the institutions and how to take them forward. Towards the end of his lecture he opts for an eventual Irish confederation, with the preservation of British citizenship for those who want it, but his constitutional pitch isn’t vital to the rest of his case. Quigley recommends a project management approach to three domestic priorities – the extra cost of the sectarian divide, skills education and what he calls “ our cultural war.” In this last, Quigley harks back to his own report on parades management, rather than piling additional pressure on to the already rocky OFDFM. Unfortunately with these three domestic themes, he avoids detailed prescriptions in an area all too short of good ideas. However Quigley’s best ideas are in his own area of expertise, practical governance and economic management. Here he recommends something akin to a sovereign fund for Northern Ireland to break out of the Barnett formula straightjacket. Quigley makes the original argument that (although he seems to hanker after a voluntary coalition), the mandatory coalition of the Executive:
“ if prepared to act in a genuinely collegiate fashion, is better placed to take unpopular decisions than most governments, which are at risk of being wrong-footed by their opponents.”
SIR GEORGE QUIGLEY ON REGIONAL FUNDING
Given the quality of inertia in budgets, it could be useful for Ministers to commission an independent, open-ended review of existing spending across the board, to see what options exist for radically reshaping programmes to release annually a significant sum for redeployment. The study could also include revenue-raising options, either under existing or new powers.It would be necessary to get agreement from London that such a sum should be allocated to a Regional Fund – akin to a sovereign-style fund – which would be allowed to accumulate to the extent that it was not expended annually. It would be available solely for strategic purposes, not to plug holes in ongoing programmes, and the existence of the Fund would not affect whatever resources were due to Northern Ireland under the normal rules. The availability of such a Fund would put real power of initiative at the disposal of the Executive.

This proposal is fully consistent with what I have been arguing in various contexts – that, if devolved government is going to make a real difference in
Northern Ireland, we need to have the measure of policy autonomy which is consonant with the raison d?tre of devolution and commensurate with the
Executive’s responsibilities. Often (as in the proposal I have just made) this could be done without any detriment to the Treasury but where necessary we
should be prepared to trade cash for flexibility. Local politics would acquire a new dimension.

Let me give just 3 examples.

My first example. The experience of the Republic demonstrates how Northern
Ireland’s ability to attract investment from the multinational powerhouses of
the global economy would have been greatly enhanced by being able to offer
them an attractive post-tax rate of return by a radical reduction in corporation
tax. Trading off a small part of the subvention we get from the Treasury for
such tax flexibility – a principle that could be extended if necessary elsewhere
in the UK on similar terms – would signal a promising new direction in public
policy.

My second example. A top corporate lawyer in Northern Ireland suggested
recently that there should be a new capital gains tax relief programme for
investors in trading businesses here, since the lack of access to capital for
growing companies may be a barrier to growth over the next few years.
My third example. The merits of the UK Government’s pre-Christmas decision
to reduce the rate of VAT from 17.5% to 15% are highly suspect. Suppose we
had had the option of keeping VAT at 17.5% and taking the cash equivalent of
the resultant savings to the Exchequer in the form of an addition to our
budget. Such a boost (probably of the order of at least £250 million) would
have given the Executive some very real policy choices during difficult times.