What a weird way to plan spending cuts

What’s the most important matter the Executive should be tackling? Your starter for 10. Wrong. It’s the economy stupid. Sammy has finally announced massive £400m cuts – and they’re only the taster. How did they come up with the figures? How were spending ministers involved? Weirdly, consultation will start now – after the cuts have been calculated and will go on for all of two months. Sammy tell us:

I have asked all Departments to provide further details on the implications of this decision for the public services they provide by publishing this information on their respective websites and I would encourage departmental committees to work closely with the relevant Departments to scrutinise this information. Unfortunately, the level of savings required meant that it was simply not possible to exempt entire departments from the process, although I would expect that my Ministerial colleagues would seek to reduce the costs of bureaucracy in the first instance.

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Health Minister McGimpsey is “disgusted” at his Health dept bearing the brunt of 40% of the cuts. Could there be any more eloquent evidence of dysfunctional government than the isolated McGimpsey’s disgust?

How have the Health cuts been broken down to arrive at the overall figure? Turn to the Health dept website and what information do you find? Not a dickey bird. To be fair, the rot starts at the top. Politiking is all. The core problem is the power broking nature of the Executive itself. A single department of the economy won’t – can’t – happen. Only the Alliance Party has the guts to come up with the limited alternative to cuts on this scale – to end the disastrous crowd-pleasing rates freeze and let water charges “ gently rise.”

Does the Executive have the will to implement Richard Barnett’s report on economic policy, the Irish Times asked? Arlene Foster is distracted just now but would it make any difference if she wasn’t? The business sector bangs on about grand strategy it can’t affect – to reduce the size of the “bloated “ public sector and therefore taxation, which is beyond the Executive’s remit. The only creative tension is over the future of the severely criticised InVest NI as analysed by the specialist John Simpson who has the field to himself. Barnett insists it should better target seed corn money to R&D and stop chucking it at new businesses more or less at random (my version). Will we ever wake up to the economic challenge when the real cuts begin to bite? I doubt it. Easier to hit default and blame the Brits after the begging bowl finally stops rattling.

IERP report – The Key Recommendations are worth repeating
? Core economic functions in Northern Ireland should be brought under a single ‘Department of the Economy’
? The Executive should establish a permanent sub-committee, chaired by the Enterprise Minister, to prioritise action on the economy. The committee should oversee the development and implementation of an economic strategy
? More emphasis needs to be placed on developing policies to promote Innovation and R&D
? InvestNI should have a more focused, dedicated and professional approach to strengthening export performance in manufacturing and tradable services
? InvestNI should be allowed more freedom to operate, enabling the organisation to be more responsive to business needs
? A small business unit to be created within InvestNI, and the approach of working only with ‘clients’ should cease
? Aside from funds designed to support seed stage projects, InvestNI should disengage its direct involvement with venture capital (VC) funds and should act as a facilitator between companies and VCs
? A study of industrial land provision should be commissioned to determine why there is a perceived need for InvestNI to purchase large amounts of land
? InvestNI should consider an internal reorganisation that reflects the differing skill sets required to support FDI, exports, Innovation / R&D and small business support
? Grants for business expansion should be phased out towards 2013. The resources should be redirected to provide greater levels of support to Innovation and R&D in indigenous and foreign owned companies
? A new institution for commercially-orientated research should be exploredInvestNI should establish a more dedicated and professional approach to supporting and stimulating exports
? In terms of supporting value added business expansions not involving Innovation and R&D, InvestNI should provide co-financing in the form of equity and / or debt to those companies that have been successful in securing funding from the private sector
? InvestNI should further reduce its support for company training, and concentrate support mainly to small firms and to projects with a high Innovative content, where retraining is necessary to realise a substantial rise in productivity
? The local education system should prepare now to meet the anticipated increased demand for higher level skills in Stem and other Innovation relevant subjects, arising from the increased prioritisation of Innovation and R&D
? Additional research in universities and public sector bodies should be aligned closely with the needs of industry in NI and potential inward investors to NI. Furthermore, the development of specific new research capabilities should be used as an incentive to attract potential investors
? Industry-led Innovation communities should be developed as a pilot to bring together business, academia and Government and exploit available market opportunities
? The Planning Service should have processing time targets which are competitive

  • Harry J

    werent these cuts apporved by the executive? what did mcgimpsey and empey do when they were beign discussed?

  • FitzjamesHorse

    Perhaps thats the double edged sword of being in a government where a Minister picks his Department from those that have not been picked already.
    Health? UUP would actually have been better off “passing” on it and letting another Party take it.
    Then McGimpsey could sit on a Committee and complain about it.

  • Paul Doran

    A State of quangos.The poor will pay.Yet all the fat cats in the Assembley are double jobbing.

    Could you realy have faith in the likes of Sammy Wilson.

  • Neil

    Interesting to think that if half the people in this here pravince paid roughly half the average household water bill, (working that out at 800,000 people paying 150 bills), we’d generate 144 million quid. That would be 16 million short of the 40% required from our health services.

    It’s staggering to think that the poulation here is so short sighted that they can’t countenance the idea of paying for their water in order to prevent people dropping dead unnnecessarily in hospital. To think of the number of folks here who are earning say 50k plus a year, and we think we’re wise subsidising their water, instead of having those who can afford it pay for it.

    And as an aside on that, anyone who thinks that the wealthy will lose out are fucking crazy. They won’t have to pay for their water, thanks to the populist, ball-less pols in Stormont, but not only that, they can afford to go private when the hospitals lose 400 million quid.

    We’re like a bunch of turkeys voting for (turkeys) xmas.

  • Paul Doran

    Why should working class people pay for their water.There are many methods foe ensuring that water is not wasted.I would love to know how much leakage there is.In Kilkenny it was reported over 80 percent of water loss was due to leakage.

    Big business now let them pay for water,Private Leisure clubs, let them pay for water,etc

  • Damian O’Loan

    I think introducing primarly-level Mandarin classes might be a more realistic and affordable priority, not to mention a way of attracting investment, given the failure of the NYC Pension Fund millions to materialise.

    It’s good that Invest NI is open to reform, though the nature of that reform needs close eye to detail.

    The cost of segregation has yet to be taken seriously, perhaps through embarrassment. This is a failure of leadership. That cost was valued at four times the amount Mr Wilson needs.

    What would be dangerous is to adopt the approach of minimising cuts by maximising debt restructuration. Every consultant will advise this, yet it is clearly not in the public, long-term interest.

    NI is the only place where dealing with the economy, no matter how bad the news, will be welcomed. That shouldn’t provide carte blanche, but it is a great opportunity to show some progressive leadership.

  • Damian O’Loan

    Just on the sequence you mention Brian, I think you have to provide something of substance before you go to consultation. It’s not enough to say we need £400m, where do we start? The question is more around how receptive Ministers and civil servants are to the contents of those consultation responses.

    Having said that, I’m sure an FoI or two would reveal that this is 99% the work of non-elected civil servants, reflected by a tiny number of meetings on the subject.

  • wild turkey

    damian

    it would be fulfilling my civic duty and an exquisite pleasure to assist in drafting the questions to DfP..

    should specific names at the top of the food chain be noted in any request?

    see link below

    http://www.whatdotheyknow.com/body/dfp_ni

    as a vaguely related aside, i recently had a good laugh re-reading some of the 1999 DETI document STRATEGY: 2010

    http://www.detini.gov.uk/about-pubs-16

    to paraphrase JK Galbraith; the only function these guys serve is to make astrologists look good.

  • Damian O’Loan

    I think it would be the Executive and each Minister you would need to address, Wild Turkey. With a timeframe spanning each of the developments that led to the £367m squeeze, as outlined in the report presented by Mr Wilson. I’d suggest it might look like this:

    Dear Sir/Madam,

    I am writing to request, under the Freedom of Information Act 2000:

    – all minutes and attendance records of any meeting held;
    – correspondence, by letter or email, between Ministers, Junior Ministers, Special Advisors and members of the NICS;
    – correspondence, by letter or email, with Non-govermental Departmental Bodies;

    specifically in relation to the preparation of The Review of 2010-11 Spending Plans Consultation Document.

    Any ideas? Brian, you’re the journalist here… I understand consultation is to be ‘mostly through the DFP committee, so I’ll leave it there.

  • The Raven

    Neil writes “It’s staggering to think that the poulation here is so short sighted that they can’t countenance the idea of paying for their water in order to prevent people dropping dead unnnecessarily in hospital.”

    Neil, I don’t think that you’ll find anyone too bothered about paying water as long as it is done fairly. And the one-size-fits-all idea that was first mooted isn’t it. The meters could have been in ten years ago.

    Damian, you mention progressive leadership in terms of the economy. And yet, in the thick of the downturn there was none. INI were nowhere to be seen. A few pamphlets on “help during the downturn” appeared from Arlene’s Department. Incredibly, the only one that reacted with any speed in my neck of the woods up here on the North Coast was Reg. I can detail how, if anyone is bored enough.

    Reflections on McGimpsey over the past couple of years from some in his own Department, were that he was firm but fair; not afraid to grasp some very thorny issues; not afraid to have a showdown with his mandarins. Those same reflections ***generally*** said he was competent, did a good job given the portfolio; and there were many in that Department who were rather glad not to be in Education, Environment, and others.

    I can’t help but think that this might partly be the reason Sammy has singled him out for the biggest whack.

    By the way:

    Barnet consistently fails to recognise that around 92% (correct me if I am wrong) of the businesses in this region are micro-enterprises.

    He consistently failed to acknowledged the rurality of the region.

    He didn’t once mention the £150m that is directed through local councils and local action groups to small businesses which INI turns their nose up at day and daily.

    The focus on STEM led innovation completely failed to recognise that there needs to be engendering of basic business skills from age-13 (and before, if possible) onwards, instead leaving THAT to Prince’s Trust and Young Enterprise and other kindly folk.

    I could go on, but frankly, there was enough fatuous arrogance gathered around the one table writing that report, for any casual observer to have had alarm bells ringing.

    Damning report of INI? They didn’t realise the half of what they were missing.

  • Damian O’Loan

    The Raven,

    I agree with most of what you say. The focus on Health does come in a possible pre-election period, and if d’Hondt is re-run, then it may not be a UU Ministry. I’m not sure if I’d take your point in that regard. There is some good news for you, I think, in terms of INI restructuration.

    Whether that logic will carry on when Barnett is revised is another question. David Cameron’s devolution intentions are as opaque as the rest of his policy ambitions. I’d guess that means a quick read of Deloitte’s website would be the best answer.

    Care to assist with the FoI above? I think it would be a good initiative for Slugger in general.

  • Brian Walker

    Damian and others, I’ve no idea how the executive functions adminstratively. Trouble is, noone else seems to know either. Is anybody asking how the system is actually functioning at any level? I see no evidence of it. Journalists obssess about the politics, understandably in a way, but that frankly is the easy bit. Policy analysis hardly exists outside academe and economic agencies and even that seems very limited. There is no journal to cover it. I’m not sure what an FOI request would achieve. Policy debate and formation as distinct from decisions tend to be protected. It might be interesting to ask simply how cuts recommendations were arrived at and whether the following consultations will be published. But very few people to care or even to realise there’s a problem. They prefer a political row.

  • Damian O’Loan

    Brian,

    Thanks for raising this issue. It touches closely on what The Raven raised.

    Where I disagree with The Raven, however, is that Barnett recognised the large number of SMEs in NI. However, he took that to be the problem.

    His solution is to incorporate them into the supply chain for high-value companies. Not only does this not reflect the nature of the SMEs on which the economy currently depends, but it also touches on another crucial error in his approach.

    He identifies the ability to attract labour intensive service enterprises, due to subsidies and low wages, as a false advantage, because:

    “However, the type of firm which chooses locations based on cost
    tend to be in lower value sectors, vulnerable to cost pressures, and are mobile to
    relocate internationally”

    Yet these are exactly the hallmarks of the high-value enterprises for whom he recommends structuring the economy. To attract those high-value global companies, nevertheless, he recommends a focus on innovation and R & D.

    But specifically, “we provide
    definitions on our interpretation of Innovation and R&D, stressing the importance of
    encouraging Innovation via imitations, adaptations and improvements to existing
    products and processes, as well as the more traditional forms of R&D.”

    This leads NI into a cul de sac of trying to compete on the same playing field with high wage costs in global terms. And it runs contrary to the now established fact that, within technology, disruptive innovation is the most progressive strategy, not to mention particularly appropriate for a young region with low public expectations.

    A quick look at Ryanair’s success is enough to show that Barnett is off the mark. Again. How does he get these commissions?

    Further, he notes that wages and productivity are linked, cites the higher productivity levels in public administration and education, but recommends that the wages in those sectors must drop.

    The key to the report, and current government strategy, is the convergence of productivity and living standards. While the rest of the world has already moved on to the need to redefine it’s conception and measurement of both – see the Stiglitz/Sen report.

    He laments the inability to recommend lower corporation tax. As in the case of Ireland, this has a quick effect contributing to a global fall in living standards, is a vicious circle for politicians and risks creating problems with the EU markets upon which NI will depend.

    Because, contrary to his over-arching focus on FDI, America has finished investing here. It has found cheaper and better options elsewhere. Look at the NYC Pension Fund, and Obama’s explicit statements.

    In terms of your point, Brian, my experience is that civil servants accept the points made in reports like this and simplify them in briefings for Ministers, who in turn accept and present them in the name of ‘working institutions.’ Debate at committee level is completely ineffective, either because of late delivery of sources to be discussed, or the incompetence of the members.

    So we’ll have a report based on false premisses, with logically incomprehensible conclusions as the basis for a PfG and Budget. SMEs will be disfavoured, unstable ‘high-value’ enterprise will be favoured, and we will repeat the mistakes of the Republic. Johann Hari wrote an interesting piece on Cameron’s intention to do the same recently – I suspect a pattern is forming. The effect on social fabric and living conditions will be disastrous.

    In terms of rural areas, Barnett expects the Tourism strategy to take care of it. Yet Culture is the hardest-hit department, and one of the ever-decreasing anglophone countries with a distinct indigenous language and culture can’t grasp that they are ‘high-value assets’.

    Anyway, back to the political row.

  • Brian Walker

    Wow Damian, I think I follow most of that. Although you’ve given a mainly negative critique, there’s material for a wider debate there. Do I detect the spirit of frustrated civil servants in some of these comments? If US FDI has dried up and the Tiger is dead, where do we get capital investment from? Dare I suggest it, the shrinking public purse? What should SMEs do? Or do we need more high volume low tech anterprises after all? More food processing or what? I’ve a hunch that agriculture will soon come into its own again. Will NI look as it once did perhaps, minus the shipyards? Is the idea of developing branch offices of southern enterprises completely dead? Is there a different path to economic integration on the island? These are some of my questions.

    I like your point about failing to exploit NI as an anglophone region with a distinct culture. There’s some scope there. Overall, general strategy is fine to discuss but as a non economist, I’d like to hear less moaning from business and see more concrete, innovative ideas.

  • Damian O’Loan

    Brian,

    I’m sure there’s plenty to disagree with in my post, but it’s interesting that when everybody says they want actual politics, you’re the only one to venture a response. Thank you.

    I must say any of the few civil servants I’ve encountered were too professional to show any frustration. Yet the role of NICS does seem to be to simply execute a strategy dictated from Whitehall (with influence from Dublin, I imagine), so you’d have to wonder if there isn’t either frustration or wasted competency and local knowledge.

    I think, if you look at The Raven’s point on basic business skills, some investment could be found privately or from somewhere like Atlantic. This could be pursued at third level, with very particular and focussed skills, Clayton Christensen’s educational theories again being relevant. Pushing BRIC-focussed future structural capacities would also create a certain competition, reversing the effect normally used by business on government. These countries are already large FDI providers, though the GFA renders that diffcult.

    I don’t know nearly enough about agriculture, though I take your point that it’s future seems unclear, with potential. What I was thinking could be interesting is a brand based on distance. Let’s call it 100 miles, where the complete supply chain, ownership and marketers are based in that radius, and base it on authentic corporate social responsibility to offset some of the extra cost – no discrimination, respect for labour conditions, a good Protestant work ethic and Catholic sense of community, in the NI case. Obviously, this needn’t be restricted to food – why not clothes, high-tech products or services?

    Regarding N/S partnership, I am broadly in favour, but not if it means importing the mistakes made by the South without learning some lessons. I’m against a corporation tax cut too. Most countries that compare with the South in that regard are US-sponsored dictatorships.

    Thanks for the comment on the Irish ‘asset’. Maybe that will be included in the Tourism strategy – but it should have been a major part of this one, in terms of infrastructural needs and other cross-cutting aspects. Such an absence is unjustifiable.

    Lastly, the aim regarding internet performance should be to rival Japan. On that, I think every penny added to public debt would be met with market approval, at least.

    Anyway, perhaps some economists or others will contribute, or not. Back to the P&J so…