Major gaffe as Cameron looks forward to NI budget cuts

David Cameron has just told Jeremy Paxman that Northern Ireland is the top of the list of  UK regions where the public sector is too big, with the North East of England coming second. Not exactly a  new discovery this, but alarm bells should ring, as Cameron  was being grilled about the size of public sector cuts he’d  make over the next few years, if he becomes prime minister.  He refused to give any figures or percentages beyond admitting  to an extra £6 billion of cuts to be brought forward in his promised June emergency budget from  next year.  He also refused to say if he’d divert funding to help the private sector. 

While he remained doggedly unspecific, he acknowledged that  his cuts woud be more severe than Gordon Brown’s over the  three years to 2014. Otherwise  this was  a  floundering performance.

Cameron’s timing was not the best if he turns up in Belfast onMonday to support Reg and the lads standing under his banner. History has just been made. This is the first time I recall any senior British politician looking ahead to cuts in  the Northern Ireland budget. I assume that Rodney Connor would  not take the Tory whip on this occasion, if elected for FST.  But the bigger question is : what would Sir Reg do?  We should be  told. I’m sure Peter Robinson would love to know. 

If severe  Tory cuts were  proposed in a hung parliament,  we’d soon find out the strength of Celtic solidarity in resisting them. Under pressure, would the Scots, Welsh and Northern Irish hang together or fight separately? Of one thing we can be sure; the Barnett formula for allocating UK funding to the devolved institutions would come under greater pressure than ever before, as  would  their relations with Westminster.

Adds  I see Michael Crick of Newsnight has caught up with me.  He reports:

David Cameron has made a fairly serious error which could be exploited by his opponents. If I was fighting in one of his target seats in the north east I’d be pretty upset. Equally the Conservative Unionists in Northern Ireland  will be pretty upset as well and it will be exploited by the DUP. In NI  the public sector is 69% of the economy but also 69% in Wales where the Conservatives are doing well. If it’s too high in  NI,  is it too high in Wales and Scotland?

Paul Mason Newsnight’s economic editor adds:

It would be hard to hold a hung parliament together with cuts like that..

 

  • slug

    Michael Crick has just said it was a mistake of Cameron and that the DUP and Labour would exploit it.

  • slug

    Though to be fair he didn’t call for cuts he was stating that the public sector is too large relative to the private sector, something I think that most people would agree with.

  • West Sider

    Did I just hear a huge cheer from DUP headquarters?

    That was a monumental mistake from Cameron and evidence of his unbridled arrogance.

    He deliberately mentioned our beloved province because he has no votes to lose or win here – despite what Reg might say.

    And I do think Sir Empty can kiss goodbye to South Antrim once the Dupes get medieval on this.

    As for the NE England, he mentioned that because he has no votes to gain there either – Labour can rightly say he is targeting their working class communities with his cuts.

    Terrible performance – he’ll probably still make it, but only just – although I can see him being the last Tory PM.

  • slug

    “”I mean in Northern Ireland it is quite clear, almost every party I think accepts this – that the size of the state has got too big, we need a bigger private sector.

    “There are other parts of the country including for instance the north east, that the aim has got to be to get the private sector, get the commercial sector going.” ”

    I think he’ll just have to clarify that its all about getting the private sector going in places like Northern Ireland and the North East – something that is to be welcomed.

  • Comrade Stalin

    slug, there’s no way you can dig your way out of this one. Cameron is promising cuts and Northern Ireland is top of the list for the big Tory slash-fest.

  • Why should it be a mistake? Anyone who pays taxes thinks the government is too big. Any constituency he has a hope of winning will be seething about the money the north, Scotland and Wales take.

    The north is not the be all and end all of the UK election. The English are angry, and with nothing to lose in Scotland or Wales, a few home truths will do him no harm with the angry English.

  • Alias

    If it is too large then it follows that it should be smaller – so cuts are the name of the game.

    I think the Tories (if they form the next government) will be forced into cutbacks in order to repair some of the considerable damage that Labour has done to the balance sheet so it it not realistic to expect the rest of the UK to continue to subsidise an underperforming region such as NI by inflating the public sector when the private sector is no longer being bombed out of it. That compensation is no longer required.

    Anyway, of course the pigs will grunt if you don’t keep their trough filled with swill but state-dependency is stagnation and what is the purpose of that other than serving the status quo?

  • iluvni

    Cameron is entirely correct.

  • Comrade Stalin

    The north is not the be all and end all of the UK election. The English are angry, and with nothing to lose in Scotland or Wales, a few home truths will do him no harm with the angry English.

    If what you mean is “the UCUNF narrative about consolidating and strengthening the links between the UK is bollocks” then we agree.

  • slug

    Well yes and no.

    Yes because as the Executive itself accepts the economy is too dependent on the public sector.

    No because the real problem here is mainly the lack of a private sector. That’s why our GDP per head is so low compared to other parts of the UK. and why ambitious people often have to leave.

    So growing the private sector is the task at hand and that can improve the balance.

  • West Sider

    Hey CS, how come you can edit your post?

    BTW – good point.

  • I would not put it quite like that, but if anyone thinks Cameron will risk an English constituency for an Irish one… Dream on.

  • Cynic2

    Hes right. It is too big. Almost 70% of GDP? Totally utterly unsustainable and it stifles economic development when Government Agencies are offering much higher wages and conditions than local firms competing in the world market can afford. It’s the Irish disease all over again

    And our brave DUP, SDLP and SF all promise tax cuts they know are illegal under European law and will never happen. They refuse to charge for water and raid the Health Service budget to pay for their political cowardice.

  • Cynic2

    By the way, being part of a country means you have to share a fair part of the burden …. not just hang off the teat all the rime crying for more

  • Comrade Stalin

    I didn’t edit it, looks like someone fixed it for me (thanks!).

    Cynic, best of luck to you explaining that on the doorsteps. “Vote for me and endorse my plan to target the NI public sector.”

  • West Sider

    By the way, being part of a country means you have to share a fair part of the burden …. not just hang off the teat all the rime crying for more

    I’m sure many fellow unionists are thinking the same. BTW – what was all that nonsense about the, er, half crown?

    I knew it was pernicious lie – and we’ll see that at the ballot box this day fortnight.

    The OHFUK will sweep all before them!

  • Alias

    Well, I gathered that much from your use of “relative” but the reality is that the government will cut your public sector rather than sprinkle magic entrepreneur dust over the population and wait for a generation of new businesses to emerge.

  • Framer

    Sammy Wilson and Robbo have been saying the state sector is too big in NI and that there is needless waste in the NI Departments so how can they slag off Cameron?

    Anyway we borrowed £163b last year. How might this be paid back?

    Who is willing to start with a few quid?

    Just joking. We are of course exempt and Brain Walker (and Crick pere et fils) safe with his whopper public sector pension is so right – the union is at risk but only if English workers stopped paying their disproportionate taxes for our Celtic pleasures.

  • Driftwood

    Comrade, you under estimate the electorate.
    Alastair Darling admitted the cuts would be worse than Thatcher under Labour.
    If you think the NI public sector is groovy and doesn’t need pruned, then you are living in fantasy land.
    David Cameron spoke honestly and openly. The NI economy is exactly like a Soviet satellite. And it is unsustainable. You and your parochial mates can preach fantasy economics but the reality is the same for all. The ‘Please sir , can I have some more’ agenda is history.
    By the way, do Alliance candidates have any knowledge of Economics? They do understand that we are subsidised to the hilt by HM Treasury. Or is Lewis Carroll your economic guru?

  • GFASupporterbutRealist

    “Political gaffe”; definition: a politician, inadvertently, telling the……truth!
    (originator: US journalist, Michael Kinsley)

  • slug

    There are plans for an enterprize zone.

  • The Raven

    A local government friend of mine (and a couple of others actually), always used the stat that there is one civil servant for every farm in Northern Ireland in JUST the Department of Agriculture.

    The problem is making the right cuts. And of course, every civil servant “let go” will incur a cost in themselves, especially if there’s an early retirement involved. And if we do mean jobs, when we say “cuts”, has anybody worked out where they will go? Or will it just be ok to cut them adrift into our very small private sector? Sure, the long-term cost of the extra unemployed won’t be any burden…..will it…?

  • Alias

    With 758,000 in employment in NI and 30.8% employed in the public sector, compared to a UK average of 19.4%, do you know how many new jobs the private sector would have to create in order to equalise with the UK average? It’s circa 410,000. Good luck with that trick when unemployment is only 4.5% and the required supply of labour ergo doesn’t exist.

  • Driftwood

    http://news.bbc.co.uk/1/hi/northern_ireland/8639708.stm

    Pete has already alluded to this, we are addicted to the UK state. And there is nowhere else to go. The Republic is heading for bankruptcy, and house prices will fall another 30-50% at least.

    Cameron is pointing out that reality is a shit state of affairs for anyone under 35 or have relatives over 65.

    On the plus side, Cormac McCarthy’s book The Road is a very good read.

  • Reader

    Alias: “do you know how many new jobs the private sector would have to create in order to equalise with the UK average? It’s circa 410,000.”
    Using the percentages you quoted, it’s 85,000, not 410,000

  • Reader

    Of course, if you assume no-one moves from the public sector to the private sector, you can maybe have your figures. But I would think that the optimistic scenario to re-balance the sectors is a shift in the workforce, not the import of a new army of workers.
    The pessimistic scenarios are somewhat different…

  • slug

    Actually NI has a very low participation rate – lower than any UK region and part of reason we have a low GNP/head – the unemployment figure masks that.

  • Cynic2

    Comrade Stalin

    I would go far further than the Tories ever will. I understand they plan a long terms freeze and very gradual reduction in real terms in NI but hiding our heads in the sand wont make it go away and no matter what lies the DUP tell voters wont change the picture.

    I was talking recently to a senior banker about the credit crunch. He was quite open. The problem in NI was never a shortage of capital to invest. It was a shortage of worthwhile businesses to invest in. That’s why so much of our capital goes South or East or (stupidly) went into houses and property. We have been so focused on the Troubles for 40 years that we have forgotten that we have to earn our keep,.

    A couple of weeks ago I was looking in the NI Jobfinder section of the Bel Tel (and it wasn’t Government Jobs night – the existence of which says something in itself). Almost every job was publicly funded.

    How long does anyone on their right minds thing this can continue. Its the dole in a more palatable wrapper.

    We need an enterprise culture and an enterprise society. Most of our politicians have lived off the state and the system for years. Are they up to creating it?

  • Cynic2

    Westsider

    I agree. But how long will people in the really deprived areas ion N I put up with living in social sink holes? We have a growing middle class of young Protestants and Catholics who are desperate for a better life. Given the chance some of them will seize the opportunity, get out there and make it. They will start to then employ their fellow citizens in a real economy.

    All that takes time and a huge effort. On average over 70 % of them will fail first time around but perhaps succeed on the 2nd or 3rd attempt. That’s what we need to foster for the long term – not almost minimum wage call centres stuffed with graduates in unwanted subjects.

  • Re-engaged

    The problem for Cameron and the UCs is the perception created that NI is singled out for special cuts. Voters will react to this especially where the UCs hope to do well (Strangford North Down East Belfast and South Antrim) and vote AL or Dup or in most cases I think not at all.

    However this is not to say he is wrong just that politically he presented it at bad time(here Monday). The public sector is bloated but my biggest problem being active in an SME is the pay scales for non frontline services. How can we justify these never mind afford them and drain a pool of resource from the private sector where (even ata lower pay) the value to the economy can be up to a factor of five higher

    Freeze non frontline pay for 3 years and see the change it would make!

  • Cynic2

    Its not just that. When the public sector contracts out it often specifies pay structures in contracts on the basis that it wants to ensure the ‘quality’ of staff. It’s strange that the private sector can achieve better results with lower pay rates. The reality is that this is intended to

    * push up outsourcing costs to make keeping civil servants more attractive
    * keep wage rates of anyone working for the Government high to divert attention from the fact that we pay more for the same job in the civil service than we do in the private sector

    We recently lost two staff to firms on civil service contracts. Both were offered about £1 – £2 an hour more than we pay – and we don’t pay minimum wage. Good luck to them. We were able to fill the gaps with equally good staff very quickly – but why is the tax payer paying so much more?

    There is also the issue of who is getting these contracts. The entire procurement system is biased towards big contracts with Irish and English firms. When the blessed Nigel was Finance Minister ( a long time ago) he announced with a fanfare that they would soon launch a new procurement policy and website that would allow SMEs to compete. Anyone seen it?

  • Comrade Stalin

    Driftwood, Cynic2,

    I suppose it’s less about the rights and wrongs concerning the size of our public sector (certainly Alliance argues that we are ripped off due to duplication – but we’d rather see that spent on improving frontline services eg health/education/transport, not frittered away in tax breaks to Cameron’s rich mates!) and more about what Eamonn Mallie observed – that Cameron has referred to us as being like an Eastern bloc state and stopped just short of calling us spongers.

    People living in the northeast part of the UK will likewise resent this implication. It also exposes the myth that Cameron sees the UK as a single entity. He clearly sees a UK with a few thick lines drawn across it, with the good for nothing state-weaned freeloaders living on the other side of the lines, who need a jolly good sorting out. I always knew that the Tories had this view of the world so it should really come as no surprise to anyone.

    I work in an SME and I see the problems associated with state intervention in the economy here all the time, especially with relation to subsidies going to certain firms from InvestNI making it difficult to recruit. Still (and I’m grateful for the economics lecture, Driftwood) I’m not naive enough to believe that if you throw a baby in the deep end of a swimming pool it will figure out how to survive all by itself. That’s what really scares me about the Tories – the sink or swim ideology. Bear in mind also that many SMEs here depend, directly or indirectly, on public spending for many of their contracts. It would be naive to believe that Cameron’s comments were restricted to talking about trimming the civil service payroll.

    We do need a strategy to expand the private sector here. I think that can be done with a reworking of public spending priorities, not necessarily cuts, at least not in the short term. But a bunch of Tories carrying scythes on their backs is not a strategy. It wasn’t in the 80s and it still isn’t now.

  • Re-engaged

    Agree with everything above Cynic2 – the reality is less accountability. Easy come easy go and by the time someone finds out it’s mired in multiple levels of management and no-one can remember what started it all. As you good luck to them, make hay and all that but unless we get real delivery on a value adding economy we do not have a future. We must make NI / UK economy stand out from the crowd – how? Tax breaks, support for high technology, value based businesses. It can be done and we can compete, our business is successfully exporting high value goods to the Far East – why? Sound investment, competitive policies and a vision – everything the public service says but does not do or where it is an inflated base. Mexico, Brazil, Turkey. Poland, Indonesia, Malaysia all recognise this and are offering businesses this why can we not?

  • Re-engaged

    Again as below I agree however I am not sure your senior banker was being entirely truthful – they are being tight. Take the BofI / UB / Lombard etc… they have tightened up only one still really open to ideas is HSBC – there are good businesses that have went or almost went to the wall – take Thermomax in Bangor – a green business, good order book, good work force – cash flow due to late payments etc… would the banks make extra facilities avail NO – why could see a quick buck by forcing admin rather than taking a longer term view.

    Genuine enterprise culture / society is what we need – why do we not the BENEFITS system is crippling us – don’t give me more overtime it will effect my tax credits, not worthwhile taking this job would lose too many extra benefits I get on top of the dole and on it goes. Reduce benefits (costs 5-6 times the Defence budget – yes we spend 5 times more on spongers than the defence of the UK) and force people into work at real wage rates

  • The Raven

    “Bear in mind also that many SMEs here depend, directly or indirectly, on public spending for many of their contracts.”

    At last. A little common sense. I ask again, because other than the usual glee at seeing public sector workers lose their jobs, I don’t seem to be getting an answer: when the axe falls, where do these people go and work? What will the private sector do when a huge chunk of work disappears? How much will it improve the private/public split when it becomes a private/public/once-was-public-sector-but-now-unemployed split?

    Even down to the very minutiae – a small rural town has a couple of public sector employers and not much else. Someone in Belfast takes the decision to close an outlying office. That town now has 20 more people on the dole, and 20 less spending in their shops.

    This is a process which has to be managed and managed carefully. Robinson – the ineffectual moron, good only at covering his own ass – threatened and sabre-rattled, and did nothing. Neither did his predecessors. Neither did the British capos before him.

    We talk about a knowledge economy. And yet we have not put the groundwork in to develop this outside of Belfast, Derry and a couple of other choice locations. We over-bureaucratise starting and running a business, above and beyond anything London could ever impose. We have huge areas of educational underachievement. We have only begun to encourage enterprise at school level in the past 15 years. We have business rents which are shockingly high and rates which yield no benefits for business. We have government-funded workspace which is woefully out of date. We have planning laws which frankly, I think, are DESIGNED to stop anyone outside of a town centre starting a business.

    This is a huge problem, stradding virtually every department’s portfolio; even DCAL couldn’t get the Creative Industries fund right. And the biggest contribution we have in some posts here is “oh this’ll bugger Reg”.

    Frankly it should have been buggering the whole lot of them ten, twenty years ago. To postulate that this will “help the DUP” is nothing more than an insult to the whole issue.

  • Cynic2

    Comrade

    Economically NI is a basket case. They are pouring in here billions more than comparable areas in the rest of the UK get and that is on top of the billions they pour in anyway because we have such a low level of real economic activity. Sometime they will stop this madness.

    All of this is one of the reason that even during the Tiger boom the Irish wanted nothing to do with this place.

  • Greenflag

    Excellent thread from all above . The larger question which goes beyond the local NI one is can the private sector in western developed countries create,innovate , and develop the jobs at wage rates that people in these countries will work for ?

    Is it realistic given NI’s geographic location , offshore and turbulent political history to think that huge cuts in public service expenditure will lead to increased private sector economic activity in the near to medium term and deliver ‘political ‘stability ‘ simultaneously ? ?That said Cynic2’s point that sometime this ‘madness’ will stop is not without merit . NI is just an extreme example of the dependant public sector syndrome and it has been in one form or another ‘dependant’ on the taxpayers of England to come up with the tax revenue differential to maintain ‘standards ‘ of public service . That in itself is no different in principle than say Leitrim being dependant on Dublin but it has had major ramifications for private sector economic activity in NI and in particular since the demise of the old traditional industries which played such a major private sector employment role in the past .

    Both Raven and Comrade Stalin make valid points and ones which I’m sure are exercising the minds of all those who are thinking about NI’s economic and social future beyond this next election .?

    Beyond that the whole thrust of the private sector and indeed the public sector is to produce more with less people, more ‘innovative ‘ technology and more concentration of capital globally into the larger economies and multinational corporations .

    There is scope for the local ‘entrepreneur’ in places like NI and the Republic and elsewhere but is it realistic to expect that given the economic and technological background that they can do what larger corporations in the past and governments of both left and right have been unable to do i.e create ‘full employment ‘ for increasingly educated populations at wage or salary rates that will motivate the work ethic ?

    The local politicians will of course remain largely quiet on this crucially important issue . Good job they can always revert back to the old tribal totem poles eh ;(?

  • Alias

    It isn’t possible to proceed with reducing the number of people in public sector employment relative to the number of people in private sector employment without cutting the number of people in public sector employment because that would require the creation of circa 410,000 new private sector jobs, which is a figure that is 10 times higher than the supply of unemployed labour. True, the participation rate is the lowest in the UK but even if it was the highest in the world, you still wouldn’t have the supply of labour required to perform the miracle of equalisation that doesn’t cut the numbers in public sector employment.

    Anyway, you know this but you’re in party-political mode and playing it down. 😉

  • The Raven

    “There is scope for the local ‘entrepreneur’ in places like NI and the Republic and elsewhere but is it realistic to expect that given the economic and technological background that they can do what larger corporations in the past and governments of both left and right have been unable to do…?”

    Spot on, GF. It’s not realistic at all. But let’s extend “entrepreneur” down to the very basics. If a kid wants to clean windows like his da, then give him the training to do it. If another kid excels in STEM subjects, feed it properly, and at the same time, expose them to (I hate this word) champions who may be able to guide him or her.

    This can be incredibly easy, if the will is there, and the momentum to make this place an “enterprise zone” is truly apparent, then:

    Take money off INI and give it to the local enterprise agencies and councils, who have been doing an unsung job with economic development for 20 years; if some people on this site did a little digging, they’d see excellent examples of private sector job creation with very little in terms of resources. Let’s make it local again, rather than centralised around a few INI offices in “regional centres”. Let’s give more of that INI funding to the Prince’s Trust, Advantage NI, Women in Enterprise and others. I never want to see more than 5% of INI’s budget spent on FDI again. Ever.

    Let’s make it really easy for people to deal with the taxman. Has anyone ever tried to get the info they need on HMRC’s website, or deal with them over the phone for guidance? Let’s completely rethink business rates. I’m not arguing for a cut – but I am arguing that there be more flexibility in how they are set and what they are spent on locally. Let’s start MAKING landlords cut their rents to get offices, shopfronts and units attractive and filled again.

    Have a complete rethink about the careers guidance given by schools, as well as how enterprise is “taught”. Get the business clinics going in some of the many derelict shopfronts in our rural towns. Get the outreach happening. Have the benefits safety net there for those starting out from scratch.

    Appreciate that not every person who wants to start a business will be bio-med or hi-tech engineering, but encourage them nonetheless. The knock-on effect could be incredible. Anyone dealing with DARD through their Rural Development Programme, will know of the incrediblly patronising attitude with which they treat anyone who isn’t “innovative”. How many people have been kept ON the dole queues by their 19th century attitudes?

    Appreciate that not every person will be an entrepreneur; that you might spend many millions on developing the next generation of business people, and that only 1 in 100 will emerge successfully. Let’s stop punishing people who’s businesses fail and who want to start again. And – this could be a whole thread in itself – let’s start really forcing small business lending from the banks, with low rates of interest.

    Realise that this is a problem which was 40 years in the making – more, some would argue – and a problem which will take at least two decades/a generation to solve. And not by swingeing government cuts.

    There’s no need for more public funding. There IS a need to remove the barriers which mean that joined-up thinking never happens. Let’s encourage MORE private sector people into civil service jobs where they can start to have an effect on how government is run. Let’s do away with boards and have every damn job advertised, all with the caveat of “if you’ve been in the civil service for 5 years or more, you need not apply.”

    This is something which should be core to every party’s manifesto. It should be the building blocks by which Invest NI works. Instead we have a region where people sneer at success, where bureaucracy kills entrepreneurship, and where kids look at drugdealers as role models. It requires a complete re-focus of almost every department’s resources, and that, as you rightly point out, Greenflag, is why it will probably never, ever happen.

    Rant over, folks and I thank you for your indulgence. In case you’re interested, I don’t run my own business, but would love to, and I hope to kick off in the next year or two. I’m not public sector either. But as part of what I do, though, I get a chance to see the incredible barriers that society as a whole puts in the way of the very smallest entreprenuers. All I have to say is, I’m amazed at the tenacity of micro-enterprise in Northern Ireland. If you had any idea of what they have to do to make even £1, you’d be demanding political heads on blocks.