Austerity budget must prompt radical approaches in Northern Ireland

 We are facing the first truly austerity budget for a generation. Cuts of 25% over 4 years in all departments except health (why ringfence Health?) are truly frightening and require radical reform in delivery. We need a radical approach that challenges the shape of our politics. Peter Robinson has already warned:

A fundamental reassessment of spending commitments will be required as Northern Ireland seeks to meet £128 million cuts imposed from Westminster…This does not include almost £400 million of separate spending reductions…. The result of this reduction is that local departments will need to make savings, although these should come from reductions in bureaucracy and administration costs in the first instance, frontline services will need to become more efficient.

This  does not go far enough. Now is the time to start facing up to the  challenges of our wastefully expensive divided society. The  power sharing Executive must  plan for a new departure that would begin to reshape it.  “Civil society,”  in other words, the movers and shakers who actually deliver must swap their customary mealy mouthed responses for speaking out clearly to help the politicians  do a better  job. Tough choices  are needed to free up money for the front line.   

Reaction so far is piecemeal

Owen Paterson SoS (What else does he do except give soundbites?)

“Working closely with the Northern Ireland Executive, we will publish a consultation paper in the autumn. This will look at mechanisms for giving NI a different rate of corporation tax and other economic reform options

Report due in the autumn. Ideas urgently needed – but you can forget harmonising corporation tax with the Republic. This is too divisive in a UK under budgetary austerity. Economist Richard Ramsay says:

Clearly, obtaining the status of an ‘Enterprise zone’, with an array of enhanced incentives, would be beneficial to the economy. However, the other side of the enterprise coin will be trying to tackle and dismantle NI’s current status as a ‘welfare benefit zone’.

“Without aggressively tackling the latter, Northern Ireland will fail to make meaningful progress in fostering a new entrepreneurial culture. Northern Ireland needs to look at more radical, region-specific solutions, to address our welfare dependency and economic inactivity. It is noted that number of Northern Ireland individuals neither in work or looking for work due to sickness (@90,000) is broadly the same size as the combined workforce currently employed in manufacturing and the financial services sector.”

Nigel Smith, NI CBI quoted in InsideIreland

Significant cuts in public expenditure were confirmed today though the exact impact on Northern Ireland remains unclear.

“However the Northern Ireland Executive needs to start preparing for more radical re-engineering of how public services are delivered.”

The rise in personal income allowance by £1,000 to £7,475, according to the government, will see 600,000 people in Northern Ireland benefit by £170 a year (in terms of the basic tax rate).

The NI Executive was told last month it must save an extra £128m on top of £393m other savings this year.

The bonanza of cross border trading for the North may be over.

Fine Gael TD Joe  McHugh

“Border retailers will welcome the announcement that British VAT is to rise from 17.5% to 20% next January. This may re-balance trade between the Republic of Ireland and Northern Ireland. (although the standard VAT rate in ROI is 21%).

Meanwhile Retail Ireland director Torlach Denihan said:

“The decision by the UK to increase its VAT rate from 15% to 20% is extremely significant.

“This is a further nail in the coffin of cross border shopping, which had already declined significantly due to substantial price cuts by retailers on this side of the border, the 20% reduction in the Irish rate of excise on spirits and the 6% increase in the value of sterling against the euro in the year to date.”

NI’s welfare dependent will be hard hit in the medium term, From Polly Toynbee’s hostile analysis

Professor Colin Talbot of Manchester Business School yesterday estimated a fifth of public sector jobs would go, a million people fired.

Benefit entitlements are being reduced to create work incentives but where is the work for them to go to?

The best hope is that once facing the detailed reality in the autumn spending review even Osborne will discover such savagery really is unthinkable.

Child poverty won’t be increased says the Chancellor but the poor are the hardest hit after the richest. And the welfare cuts are projected only for two years, with yet more to come after 2012

• Benefits, tax credits and public service pensions will increase in line with consumer prices rather than the retail price index.

Child benefit to be frozen for the next three years.

• Caps on housing benefit to be introduced – from £280 a week for a one-bedroom property to £400 a week for a four-bedroom or larger. Together with other measures this will reduce costs of housing benefit by £1.8bn a year by the end of the parliament.

• Sure start maternity grant will go to the first child only.

Eligibility for child tax credits to be reduced for families with a household income of more than £40,000 from April next year

• The baby element of child tax credit will be abolished from April next year

• Child element of the child tax credit to increase by £150 above indexation next year.

This is no time to waste a good crisis.

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  • fitzjameshorse1745

    Health is “ring fenced” because of the totemic nature of the National Health Service, the number of employees/voters (who take the NHS/jobs seriously enough to vote against a Party with the nerve to do something. And personally Ive never met a believer in health insurance who wasnt an arch Tory.
    Do “we” need three A&Es in Belfast.
    I dont think “we” do.
    But “we” like our jobs and the NHS is a big employer.
    Councils I can take or leave. I dont much care if theres 26 or none.
    How can we possibly make inroads into Sectarianism when our Agreement actually copper fastens the two state solution.
    Is it really an issue for anyone except the Overclass and Outsiders. “We” seem happy enough with it.
    Curiously I have mised experiences of non sectarian education.
    When my sons were about 10 and 8 (for reasons of geography in temporary accomodation) we sent our sons accross the road to a “state” school with just 48 on the roll. Now closed the teachers were extremely welcoming to our cuckoos in the nest. The cold shoulder came from a couple of families.
    Undeterred we sent #1 for three years to an “integrated” school. Frankly it wasnt very good and we took him away. Principles are secondary to family.

  • Chris Martin

    It would be a start if our MLAs would not keep stating the NEED for cuts and then squealing every time a service in their constituency is cut. As long as it’s someone else’s service, it seems, cuts are fine.

  • Tomagaddy

    * The Government will shortly announce details of a scheme to help new businesses in countries and regions outside London, the East and South East. The three-year scheme will exempt new businesses from up to GBP5,000 of employer NICs payments, for each of their first 10 employees hired.
    Subject to meeting the necessary legal requirements, the Government intends to have the scheme up and running by September. Any new business set up from 22 June which meets the criteria set out in the forthcoming announcement will benefit from the scheme. Up to 15,000 businesses in Northern Ireland could benefit. Thank goodness the DUP werent able to prop up a Labour Govt!
    * The impact of the employer NICs rate rise previously announced will be largely reversed by increasing the threshold for employer NICs by GBP21 a week above indexation. This will lead to a saving of around GBP80 million in Northern Ireland.
    * The income tax personal allowance for those aged under 65 will be increased by GBP1,000 In Northern Ireland over 600,000 basic rate taxpayers will gain from this measure.
    * The Enterprise Finance Guarantee (EFG) supports lending to viable small businesses that lack sufficient collateral or financial track record to access a normal commercial loan. The EFG scheme is being increased by GBP200 million to support additional lending of up to GBP700 million for small businesses this year, bringing the total size of the facility since January 2009 to close to GBP1.7 billion. Since January 2009, 133 eligible cases have resulted in GBP19.7 million of loan offers made in Northern Ireland.
    * Budget announces a package of corporate tax reforms reducing the main rate of Corporation Tax. Nearly one million companies in the UK will see their corporation tax rates fall.
    * The Budget announces the path of public spending for the period until 2015-16. The budget for the Northern Ireland Executive will be determined in the Spending Review in the normal way. The Northern Ireland Stage 2 Financial Package has been protected
    * The Budget also announces that the Government will produce a paper on rebalancing the Northern Ireland economy, in consultation with the Northern Ireland Executive, including examining potential mechanisms for changing the corporation tax rate in Northern Ireland.

  • aquifer

    ‘you can forget harmonising corporation tax with the Republic’

    Why? This is cheapest in a recession, and why do cuts twice when once will do. The sooner the corporation tax is cut, the longer local firms have to grow, and the more time growing GB firms have to relocate here.

    The property market may crash, but who is that a problem for. Not first time buyers or incoming entrepreneurs. Bust local banks might find buyers with a low local corporation tax rate.

  • slug

    “Ideas urgently needed – but you can forget harmonising corporation tax with the Republic. This is too divisive in a UK under budgetary austerity”

    In fact 26% of the difference with the Republic was removed in the budget. So that leaves less to do.

    Also, the income tax threshold increase is good for NI as we have more low income people. This will give people more incentive to work relatove to not work, and as we need to deal with our inactivity problem, this is useful.

  • Drumlin Rock

    We could save half a billion and scrap the A5 upgrade.

  • VI Lurgan

    Given the amount of tax evasion in UK, would it not be seen as an investment to increase HMRC Investigation staff to recoup tax evasion or is it that as Tory donors and big business benefit most, it might be better to ignore this option.
    Also, the Stormont Executive has no powers regarding Social Security Benefits and therefore are tied in by default to whatever decisions, especially regarding IT, are made in UK. So no point in Stormont forusing on new ways to get people of the sick.
    Could we also close the Culture, Arts and Leisure Dept to stop spending on Irish language, Ulster-Scots(not even a language) and creationist fairytales.
    Just a few thoughts!!

  • Kathy C

    welcome to the real world. Shows northern ireland isn’t special anymore and the rest of the uk won’t throw money at the north just to keep everyone happy. It’s about time the north ante’s up like the rest of the uk. Anyway….the north’s politicans like adams and mcguiness have done well for themselves…the rate hikes won’t bother them much.

  • Cynic

    Wonderful stuff Brian but this week the DUP sabotaged even a plan to reform their system of graft (sorry, expenses) at Stormont. They cannot agree on Education or local government reform.This week their efforts have been focused on a clean neighbourhoods act. This stunning piece of legislation will:

    * make it illegal to drop litter on a lake

    * allow councils to prohibit distribution of flyers or written matter in a designated area (But not matter which is political or religious)

    * require all burglar alarm owners to register keyholders

    All worthy stuff from a legislature in touch with its community and able to address the big issues of its age like public debt, unemployment, etc etc

  • Cynic

    “adams and mcguiness have done well for themselves”

    …what are you suggesting?

    We all know (for they have told us) that they live on the average industrial wage. Indeed, with homes in NI and holiday homes in Donegal they are exemplars to us all what one can achieve if you don’t smoke, don’t drink and are careful with your cash.

  • OldSod

    Drastic action was needed to avert financial disaster. We are a nation that lives beyond its means, where everybody expects they are owed a living from the state. The reality is that we should not be so dependent on the state, because whatever the state gives to one person, it first has to take away from another person. While it is fair that we all contribute to the common wealth, is it fair to extort working people in order to maintain benefits which were once seen as luxuries and are now seen as entitlements? I have see real poverty in the 3rd world and nobody in Northern Ireland has any right to cry poverty when they have a roof over their head, food, warmth and free health-care and education, any one of which someone from the 3rd world would give anything to have. Labour spent money recklessly and combined with the credit crunch, resulted in the current mess. We either start working at living within our means now, or we keep running up the bill and leave the problem for the next generation to deal with. Some peoples petulance about the cutbacks and inability to deal with the new reality reminds me of some peoples attitude to pollution and dwindling natural resources,… denial and an willingness to deal with the problem now, instead wishing to preserve a standard of living they have become accustomed to.

  • Brian Walker

    fitz, I’m not arguing for compulsory integrated education, just for getting on with rationalisation along agreed lines. Slug, harmonising corporation tax with Rep would create uproar in the rest of the UK while NI is part of the same fiscal system. It would also carry implications for public spending which would be far from welcome. Something might be done with an enterprise zone – let’s have the ideas. We have until the autumn to work out a plan.

  • vanhelsing

    Cynic,
    ————-Wonderful stuff Brian but this week the DUP sabotaged even a plan to reform their system of graft (sorry, expenses) at Stormont————-

    Nice spin but perhaps the truth would be better
    http://www.bbc.co.uk/blogs/thereporters/markdevenport/

    ‘Sinn Fein criticised the DUP for blocking an Assembly Bill which Ms Ní Chuilín argued would pave the way towards creating an independent body to oversee MLAs’ allowances and pay. But the DUP said they had blocked the bill precisely because it would have meant that in an interim period the politicians would have to vote on a new allowances regime. The DUP, argued Peter Weir, also wants an independent body set up as soon as possible. So both parties appear to want the same thing, and yet are rowing about how they get there.’

    If you’re going to post cynic try to tell the whole truth not just your version – you’re not a shinner staffer are you? 🙂

  • Seymour Major

    Brian,

    Worth noting the Bow Group report partly authored by David Trimble in which the EU legal problem of reducing Corporation tax in NI, without reducing it anywhere else in the UK, is discussed. It looks as though the legality problem can only be got around if the power to levy Corporation tax in Northern Ireland is devolved !!!

    The report recommends a UK wide reduction of corporation tax to 20%. It also echoes what you have been saying, which is that most of the initiatives for developing Northern Ireland’s private sector economy has to come from Devolved Government. It says this

    “A reduction of the wider rate of UK corporation tax for both large and small businesses should be implemented, with a longer term aspiration to reduce these rates below 20%.

    “In the context of devolution, the UK national government can only do so much, as ultimately it is down to the politicians – and wider community – in Northern Ireland to commit to a long term plan and implement the required changes in a measurable way. In his discussions with this paper, Finance Minister Sammy Wilson intimated that where possible, he would not hit departments that will help the private sector grow in his budgets. This is a positive start, but for Northern Ireland to become an ‘enterprise nation’, a long-term vision, and active implementation are required by those in the departments of the Northern Irish Executive that hold the power to sustainably develop the economy into the future.”

    I would like to see the Business rate abolished with the Northern Ireland grant topped up to compensate it. I would also like to see investment in capital projects, including improving the road network, particularly in relation to the Border and including the bridge-building projects which Tom Elliot is opposed to. In conjunction with greater road network development, I would like to see more development of the St. Angello Airport (Enniskillen), which would be hugely beneficial to the economy of the West.

    All of these proposals cost money. However, MLAs, when their brain cells talk to each other, will find that a Conservative Government will listen to any proposal which has as its priority the development of the Northern Ireland private sector economy. They might even find, to their pleasant surprise, that such projects will be positively supported if the Northern Ireland politicians are also prepared to take the other measures necessary to bring efficiency to the public sector.

    The recession and the state of the UK’s finances is, if politicians read the game the right way, an opportunity.

  • Dewi

    A fascinating fact is I reckon that the regional variation in the NIC struff is the fiirst regional taxation variation that I can recall – a precedent for corporation tax?

  • slug

    The corp tax rate for smaller companies is down to 20% in the budget – most of the business in NI is smaller companies.

  • fitzjameshorse1745

    But do you see any rioting in the street where people are demanding integrated education?
    Its a non issue. Except of course in Helens Bay and Cultra where it could be “rationalised”.
    No great call for it to be rationalised in Bushmills or Crossmaglen.
    Take….oh at random……Saintfield. There might well be a perfectly good “State” school. There might well be a perfectly good “Catholic” school. The usual suspects might well want an “integrated” school. And different usual suspects might want a Bunscoil.
    Im sure this might make “inroads into the £1.5Bn cost” of sectarianism in Cultra and Helens Bay.
    But Id think it would take something much more fundamental to deal with a 14 year old Catholic girl in Moyard being bricked in the face. Or the young 14 year old Protestant lad at Tescos in Lurgan.
    The driving force behind these anti-sectarian initiatives are of course not in Moyard or Lurgan. And thesenior civil servants with the budgets arent either. The elected politicians ARE from Moyard and Lurgan.
    And why should these “turkeys” vote for Christmas.
    The Creative Ambiguity is a plank in the Agreement. So is Sectarianism. Rightly or wrongly the Agreement is based in “two community” sectarianism and when that Agreement was announced we all breathed a sigh of relief.
    We cannot cherry pick it now.
    Both communities……in so far as they WANT to remain TWO communities have a vested interest in seperation (apartheid if you like) and will hold on to everything (including education) that divides us.
    Not perfect but it seems to be working.

  • John East Belfast

    Enterprise Zone Ideas for NI

    1. Reduce VAT to 15% – it will not affect the rest of the UK because the Irish Sea will prevent that. The only people it will impact is the ROI but that is not our problem.
    However it will reduce the overall cost of doing Business in NI and seriously boost our Retail Trade

    2. Reduce VAT on hotel rooms to 10% (or whatever EU legislation allows) – it will seriously boost our tourist trade as well and make NI an attractive place to host conferences

    3. Reduce all Fuel Duty Rates and track the ROI rate – will wipe out fuel smuggling and wont upset GB as nobody is going to bring their car over to NI to fill up

    4. Increase tax cerdits on R&D carried out in NI companies to 100%.

    5. Come up with innovative tax incentives around CGT to attract start up and seed capital from the Private Equity Industry.

    6. Reduce Employer NIC from 13.8% to 10%

    7. Leave Corp Tax at UK levels

    How to pay for all above ?

    Scrap Invest NI for everything other than an information shop for FDI – no grants whatsoever

    This would transform the NI economy

  • Greenflag

    ‘surely the time is overdue to make inroads on the £1.5 billion annual costs of the sectarian divide, including education ?’

    Whether it’s overdue or not it should be done . The State needs to stop supporting ‘sectarian’ education or ‘sectarian’ anything else . Let the priests and ministers teach their chosen ‘brand ‘ religious denomination at Sunday school or on Saturday mornings using any local school facilities available . The churches should also pay for the rental of those premises for ‘religious ‘ indoctrination purposes .

    Private religious schools should be exactly just that -private and religious and they need to be fully financed by the church or churches in question and their members with NO financial support from the State .

    Why should one pay taxes so that young people are brainwashed into medieval mind sets by clerics of any and all denominations ?

  • Mack

    Private religious schools should be exactly just that -private and religious and they need to be fully financed by the church or churches in question and their members with NO financial support from the State .

    That’s a very authitarian line Greenflag. All parents pay their taxes (well most do). They should be entitled to a contribution from the state for their child’s education and should be free to chose where their children get educated (and not limited by an 11 plus). Think Sweden not Ireland or Britain.

    If parents want to send their kids to religous schools so be it. If they don’t, and they chose something else – those schools go bust. I am all for choice and competition.

  • Brian Walker

    John East Belfast. Stormont as you know has no powers to vary taxes and nothing so sweeping is in Calman for Scotland. You also have to remember than if taxes locally were to go down, so would the block grant. Not a good idea at the moment. It would be good to read an argument for NI tax varying powers though.

    On schools. the debate here seems to have gone down a cul de sac. By any standards there are too many surplus places. There are several ways to cut it without unattainable full integration

  • John East Belfast

    Brian

    I know Stormont has no tax varying powers – thank God I say – can you imagine Caitriona Ruane with her hand on a tax raising lever ? Stormont is full of big Govt spenders and that is a habit they will find hard to break and will tax us till the pips squeak to pay for it. Not to mention Sinn Fein – possibly the largest party – is full of Marxists and wealth re-distributors.
    If they get tax raising powers I think I would be off to be honest.

    However I thought you were asking for ideas for the UK National Govt suggestion to make NI an Enterprise Zone within which some degree of fiscal flexibility would be involved otherwise there is no point. Such fiscal flexibility will be all about promoting enterprise and would not be about raising taxes for daft spending.

    What I am suggesting is using those fiscal tools that will not overly upset the UK fiscal cart by concentrating on Indirect Taxes and exploiting our natural sea border with GB.

    As for paying for the tax loss I am suggesting using Invest NI’s ridiculous £240m + annual budget.

  • Munsterview

    Cynic

    In regard to Gerry Adams :

    A member of PEN, the international guild of writers Gerry Adams has published several books including; A Pathway to Peace, The Politics of Irish Freedom and Selected Writings, which provide expositions of his political thinking; Falls Memories, an autobiographical memoir; Cage Eleven, stories relating to prison experiences, The Street and Other Stories, a collection of short stories and Before the Dawn, an autobiography . He is also the author of countless articles and book reviews and a featured columnist on Irish politics for The Irish Voice. An enthusiastic Gaelic sports supporter Gerry Adams is also a fluent speaker of Irish and continues to support cultural growth and appreciation in Ireland.

    This is not up to date and neither will I go to the trouble of doing so as it would not make one iota of difference to those who want to see the worst.

    Gerry’s books were written in his personal capacity, most were published by Brandon Press and I am sure if you gave them an em they would be happy to give their latest sales figures for all of Gerrys books.

    Do the maths; is the man now to be faulted for being a commercial literary success? More luck to him, I would not mind having his authors royalties, neither I would imagine would most of his critics, political and otherwise!

    However that would be constructive, much easier to snipe from the sidelines as this is not about Gerry’s incomes, it is about not passing up an opportunity for character denigration, Sammy Wilson style!

  • JEB:

    And they’ll all remain big spenders so long as they’re spending other people’s money. The only way to change this culture is to make them responsible for raising the bulk of their own revenue (there will always need to be some form of central subvention to even out regional disparities of course). The responses of most parties to the budget cuts have been variations on “we’ll beg Westminster to be nice to us”. NI can’t move on from such clientelist politics until the Westminster-Stormont financial relationship is rebalanced.

  • Cynic

    The Irish book market 9s dead. What were the sales.

  • Barnshee

    “What I am suggesting is using those fiscal tools that will not overly upset the UK fiscal cart by concentrating on Indirect Taxes and exploiting our natural sea border with GB.”

    Great– asap please—- I will reregister my company in N Ireland and channel all my invoicing through it saving on the 20% vat rate and since we are all in the UK -legal

    I will also make a further firtune chartering tankers and drawing petrol etc from Belfast -again we are all in the UK lagain legal

    You are either in or out of a fiscal union.

  • John East Belfast

    Barnshee

    With respect you clearly dont know how VAT works.
    Vat is ultimately borne by the final recipient. If you buy fuel in NI and ultimately sell it in GB your GB customers will ultimately pay VAT at 20%.

    As for having your company registered in NI and invoicing therefrom – your customer might get an advantage if you supply it with goods or services if it is not registered for Vat itself but that is rare. The vast majority of the VAT saving will be enjoyed by those living, visiting and shopping within NI itself – consumers and tourists.

    You might get GB folk prepared to come to Belfast to buy their car and save 5% but that will be weighed against their travelling expenses.

    Andrew

    The problem is those High Spenders would have no problem taxing everyone for money and as the SF vote in a particular comes in greater proportion from Belfast’s “benefit class” then their voters would not object.
    It would have an interesting impact on the Catholic middle class though who you might find ultimately giving their vote to a NI right of centre party as opposed to SF or the left of centre SDLP.

  • Greenflag

    ‘That’s a very authotarian line Greenflag.’

    Parents who choose to send their children to specific denominational schools could receive a tax credit or deduction and that money would be sent directly to the ‘church ‘ of their choice -like in Germany . In the USA public school education both at elementary (primary) and high school (secondary) is fee free . Private schools Catholic and other Christian and Jewish schools also exist but the parents pay school fees which would be prohibitive for most Americans

    I’m for choice too . However people who value a religious denominated education ought to have the courage of their convictions by paying for it both from their taxes via transfers and from ‘charitable ‘ donations and fees when required .

  • Mack

    The American education system is hardly as good or as fair as the Swedish one. Everyone pays for education through taxes – it is unreasonable to expect parents to pay more to recieve a particular type of education for their children. Just as it is unreasonable today to effectively force a religous education on the vast bulk of our children.

  • Munsterview

    I am not Gerry Adams publisher, Brandon Books are.

    Tel…… 00353 66 915 14 63, do your own research !

  • Isn’t that the way normal countries work? You can’t argue that Stormont shouldn’t have XYZ power because the wrong politicians might get voted in – that’s the price of democracy. Perhaps the painful experience of a tax-and-spend executive will be necessary before lessons are properly learned, but how can we expect to become a more politically mature society if we don’t take responsibility for our own electoral choices? Politics in NI has for the past forty years been solely about begging Westminster to do things on our behalf. Now we have a system where Stormont is responsible for spending taxes but not raising them – an entire polity with a welfare-dependent mindset. Our infantile politics will never improve if it is protected from its own faults.

  • Greenflag

    Mack ,

    I can’t comment on the Swedish educational model as I know little about it . But I’ll take it a given that for most schoolchildren it’s probably far better than either the USA, UK , or Ireland at least in terms of academic outcomes and the ‘socialisation’ of the young . Religion per se would be I would think not much of an issue in largely secular Sweden .

    ‘it is unreasonable to expect parents to pay more to recieve a particular type of education for their children.’

    I would’nt think so . The State cannot afford to send everybody to Eton or Harrow or Clongowes Wood .

    ‘ it is unreasonable today to effectively force a religous education on the vast bulk of our children.’

    Which is why control of the primary and second level schools should be removed from the church /churches . Those parents who want their children to have a special education including religious indoctrination should in my view be prepared to pay for it . The Churches can organise Sunday and Saturday schools and even ‘recruit ‘ those teachers who are ‘religiously’ minded to help out .

  • Greenflag

    AG ,

    ‘Perhaps the painful experience of a tax-and-spend executive will be necessary before lessons are properly learned, but how can we expect to become a more politically mature society if we don’t take responsibility for our own electoral choices?’

    You might be forgiven for thinking that -Alas the ‘painful ‘ lessons that were learned by the Irish electorate in the mid to late 1980’s when some 250,000 emigrated in response to the then economic crisis caused by non stop spending and ever higher taxation -we quickly forgotten in the later ‘irrational ‘ exuberance of the Celtic tiger .

    ‘Politics in NI has for the past forty years been solely about begging Westminster to do things on our behalf.’

    True enough but in the circumstances not surprising . The previous 40 years of the NI polity was not noted for it’s political maturity or perspicacity either.

    ‘Our infantile politics will never improve if it is protected from its own faults.’

    As long as the current NI State exists in its present format you should be satisfied with ‘infantile ‘ politics . If the local politicians ever ‘mature ‘ the State of NI will be swept away . Nobody ever wanted it anyway and it’s sole achievement over most of it’s existence has been to make a bad situation at the outset worse than it needs to be .

    It’s catch 22 for the NI polity .

  • Glencoppagagh

    “The previous 40 years of the NI polity was not noted for it’s political maturity or perspicacity either”

    But not noted for profligate spending either.

  • Greenflag

    Glencoppagh ,

    ‘ not noted for profligate spending either.’

    That’s right . They even opposed Aneurin Bevan’s Social Welfare Reforms in the UK and opposed ‘free third level ‘ education for UK citizens . It eh was’nt appropriate for Northern Ireland because the ‘taigs’ would benefit. The fact that some ‘proddies’ would also benefit was lost on the grandees of the old UUP governments . Can’t have the plebs and certainly not the protestant plebs getting too big for their boots eh?

    Another more important reasons behind their not so profligate spending was they did’nt have it to spend , and had no powers of taxation and what little they had to spend they made sure to direct it towards their ‘supporters’ wherever they could .

    They got away with it for quite a while . As always however the longer an inherently undemocratic and corrupt regime is allowed to continue then that much longer will be it’s recovery following the inevitable systemic collapse.

  • Mack

    I would’nt think so . The State cannot afford to send everybody to Eton or Harrow or Clongowes Wood .

    No, but it can contibute equally to each child’s education if needs be. In Sweden you can send your child to any school public or private and the state will contribute a set amount (the only limitation is the school can solicit a top up).

    The main issue I have with your post is you appear to want to use state power to force parents to give up religious education.

    The whole point about freedom is that people should be free do what they want with it providing it doesn’t impinge on the freedom of others.

  • Mack

    Typo –
    The school can not solicit a top-up.

  • Munsterview

    John,

    why not take your argument to it’s logical conclusion : treat the Island of Ireland as a unified island economy?

    Are the problems of a small business exporter in Leterkenny all that much different from that of their counterparts in Derry?

    Are the problems of the Northern fishing industry( what is left of it) closer those experiences by those of the West Coast of Ireland communities or that of the East coast of England ?

    Are farmers ten kilometers North of the Border any more privileged or insulated from market forces than their counterparts ten kilometers South of the Border ?

    Tourism is already marketed as a single unit on this Island; how different are the problems arising for a B & B in Antrim and one in Sligo ?

    My son and his partner has just returned from a trip up the West of Ireland, into Derry across to Armagh and Belfast before coming back down the East Coast. All B & B they stayed in had the same problems, they wanted to know how others along the route were doing and they had an All Ireland perspective of their industry.

    Northern Farmers and Fishermen have long recognized this reality; their representatives are probably more farmilar with and can find more sympathy from the Irish EU offices and officials that from their British counterparts. However this another of these quite diplomacy issues in that all parties keep these meetings sub rosa for reasons of real politic.

    It is only when we put real politics before optics and threat the economics of this landmass as they really are and dictated by the reality of the situation, that of an offshore Island twice removed from the European Continent and potential mass markets, that we can begin to come to grips with some of the real and unescapable infrastructural problems on this island.

    Shortly after the current world wide economic collapse I met an old man in a West Cork Gaeltacht filling station who knew me, his greeting ” Well a bhuachaill ! ta an thone thithe as an domhan aris ? “……. ” well my boy !, the arse has fallen out of the world again ? ” How right he was!

    The sooner we all on this land mass take cognizance of that reality and starting pro-acting as an integrated off shore all Island economy, the better we can cope with this International reality.

  • Barnshee

    Sorry- you don`t know how vat works — my company in N Ireland will invoice and SELL at 15% in your scenario.

    Excise duty is the big component in fuel prices-lower it in NI and I will tankerfuel t to GB and as I say make a fortune. –essentially this is what the smugglers have done and you want to make it legal?

    You are either in or out of a fiscal union. No individual area can go it alone– could Scotland reduce the Excise duty on whisky and not be overrun by the rest of us buying it -how could we be prevented?

  • George

    JEB:

    Pie in the sky figures, I’m afraid. The Invest NI annual budget is only 150 million a year. I don’t know on what grounds you think that all of the above would only cost 150 million sterling.

    The Irish government reckoned that when the cross-border shopping was at its height, the losses were around 500 million euros.

    This had more than halved even before the UK emergency budget and subsequent VAT hike so scrapping Invest NI wouldn’t even finance one thing on your list.

    In fact, the way things are going, it will be the Irish Republic which will be cashing in on the cross-border trade soon.

    It already makes hundreds of millions from the fuel differential and with inflation on its way in the UK, the gap is only going to grow.

    But that’s a side-effect not an economic policy to make money from beggaring our neighbour.

    What you are advocating is setting up a retail Tijuana in Newry. This is not the same as setting up an Enterprise Zone.

    Is that the height of northern entrepreneurialism? How disappointing.

  • John East Belfast

    Barnshee

    Without knowing what your company does and who its customers are it is hard to tell how a VAT rate of 15% in NI will help you with sales in GB ?
    But remember if your customers are registered for VAT it will not matter to them what VAT rate you sell to them at.

    Also as for the fuel unless you intend to use it all yourself – ie you are perhaps in the Freight Distribution business – then bringing back tankers of fuel at 15% VAT is of no advantage to someone who intends selling it onto to GB customers where VAT at 20% would have to be levied. Otherwise Tankers of Fuel would have been crossing the Irish Sea to GB years ago from the Republic.

    However trying to sell Fuel in GB at less than 20% VAT would be illegal.

    As I said VAT is an Input and Output tax that ultimately falls on the final recipient – the rate at which registered Business users incur it up the chain is irrelevant

  • John East Belfast

    George

    The Invest NI Grant budget is around £150m but they also have over 400 people working for them incurring rent and expenses.
    The last figures I saw showed us spending over £200m a year on the entity one way or another.

    Have I stress tested all these figures – no – but neither have you.

    However what has to be done with regional taxes is something that benefits and not takes away from the greater whole.

    The UK top rate of Corporation Tax is 28% (to be 24%) because the mandarins in Whitehall believe that to be the Optimum tax take for the UK. They know there are many UK companies who will live with these figures.

    That this affects the disadvantaged regions – away from the South East of England critical mass – probably.
    However Varney also knew that if NI and others got a much lower CT Rate then that would seriously upset the overall UK tax take and UK companies would re-locate.
    Therefore any tinkering with regional taxes should not let this occur.

    What I am saying is that NI has a natural sea border with the rest of the UK meaning that tinkering with NI Taxes should concentrate on Indirect taxes.
    Those Indirect Taxes will not directly affect the rest of GB.

    However it will reduce the overall cost of living in NI – and hence wages – boost our/UK export retail industry with the ROI and greatly increase our tourist industry,.
    All of that could be done with minimum impact on GB retail.

    We should exploit our natural sea border with GB.

    I also said we should give consideration within any enterprise zone to tax initiatives that would encourage private equity capital – now that it is going to be hammered at 28% in GB – and more Research & Development Assistance. These would assist the non retail side.

    None of the above would be as disappoinig – as you say – as going around the world with a begging bowl encouraging the Chinese, among others, to come and build factories for you because you have no ideas of your own

  • John East Belfast

    Andrew

    I dont know if you live in NI but I am not prepared to go through a few years of pain waiting for middle class nationalists, in particular but not exclusively so, to wake up and realise that left wing politicians are not good guardians of our money – I pay enough taxes already.

    Tax varying powers to NI will inevitably mean tax raising powers.
    If Ruanne got her hand on a tax raising lever – be afraid – be very afraid.

    I would have no problems with Tax Varying powers if it was written in law that such varying could only be Reducing and paid for by savings in Govt Expenditure. Any increases would have to be with the written approval of the UK govt.

    However the kind of discipline you are calling for can equally be achieved by a reduction in the NI subvention grant and then the politicians have to cut their cloth.

    However the one thing that would concern me though is that this cant be done overnight and I fear the Tories cutting too hard and too quickly will sink us before we learn to swim

  • John East Belfast

    Greenflag

    Although it is true that there was initial oppostion to the Welfare Reforms among the unionist ruling class it wasnt to do with educating Catholics but more to do with their inherent conservatism and opposition to state spending and tax raising.

    However any opposition was short lived because dont under estimate that the same unionist ruling class had to bring that huge unionist alliance with it – including the highly unionised Protestant working class. The NI Labour Party was always biting at its heels.

    It wasnt just Catholics that would benefit from the Welfare Reforms and the ruling class knew it.

    In addition the other argument – which came true throughout the sixties – was that the superior numbers in secondary education and the Welfare State would cement partition by creating a gap between NI & ROI.

    Issues of how unionism approaches UK Economic Policy and yet brings its broad camp with it at the same time continue to be the issues of today

  • Glencoppagagh

    Greenflag
    ‘…the ‘taigs’ would benefit’

    You’ve got a point there, I’ll admit. British social security spawned the ‘demographics’ which nationalists drool about. It wasn’t designed for people with third-world habits of procreation.

  • John East Belfast

    Glencoppagagh

    I think the opposite is true.
    Poverty tends to spawn large families but prosperity tends to have the opposite affect

  • I think I misused the word ‘clientelist’ earlier… oops.

    I don’t currently live in NI, although I did up until four years ago.

    I am not prepared to go through a few years of pain waiting for middle class nationalists, in particular but not exclusively so, to wake up and realise that left wing politicians are not good guardians of our money

    Scotland has had tax-varying powers for over a decade now, and exactly the same warnings were given about how left-wing politicians would have free rein to destroy the Scottish economy. In the end nothing much happened, because the politicians knew that cranking up taxes would hurt them at the ballot box. People are more intelligent than I think you give them credit for.

  • John East Belfast

    Andrew

    Scotland and no where else on these Isles would put a party like SF as the biggest party in Stormont.

    SF are re-distributive Marxists – they will see it as their duty to tax and spend – you dont think they will be tax reducers do you ?

    Sorry Andrew but I am not prepared to be a guinea pig whiilst nationalist voters come to their senses

  • Scotland and no where else on these Isles would put a party like SF as the biggest party in Stormont.

    So it’s still all about stopping SF by other means because you can’t stop them at the ballot box? Maybe if other parties made some attempt to address the concerns of SF voters they wouldn’t get so much support. I’m really getting sick of unionists crying that it’s not fair that SF get so many votes, but doing nothing to try to win those votes themselves.

    Sorry Andrew but I am not prepared to be a guinea pig whiilst nationalist voters come to their senses

    So Northern Ireland can’t have tax powers because nationalists can’t be trusted to vote correctly?

  • John East Belfast

    Andrew

    It has got nothing to do with unionists wanting to stop SF.

    You said above

    “The only way to change this culture is to make them responsible for raising the bulk of their own revenue..”

    and, unlike you, as someone who lives here and pays taxes here I dont want a few years of SF and others raising their Revenue – I pay enough taxes and rates already thnak you very much

    Anyhow I said two things

    1. They can have tax varying powers so long as they only mean Tax lowering powers

    2. You can have the same objective of what you are getting at by UK central Govt reducing the NI subvention meaning they will have to do the same or less with less money.

    If you give them the chance of filling the hole elsewhere then that is what they will do.

    There is no reason to give NI tax Raising powers so you are getting yourself excited unnecessarily

  • JEB,

    I think you misunderstand me. By “tax-raising powers” I mean “tax-levying powers”, not “tax-increasing powers”. But the freedom to raise or lower taxes is one of the basic functions of a political entity. Even local councils have the (limited) power to raise or lower domestic rates.

  • John East Belfast

    Andrew

    In NI people largely dont vote for a political party’s economic expertise – that is why SF is the largest nationalist party in NI and possibly the largest party in the Stormont Assembly next year.
    They dont feature in the 26 counties both because of their historical baggage and also the fact they are seen as tax raising Marxists.

    I am sorry but as a NI tax payer I really dont welcome their ability to screw me more than they can already via domestic rates.

    On the latter I am scared there because at present we have no cap on the same -unlike London. A housing revaluation is due next year and we are all facing big rises. Add to that Water Charges.

    Meanwhile SF have more than their share of the Benefits Class voting for them – all on Housing and Rates assistance. SF wont give a damn they will not get my vote because I dont like their economic policies.

    Even the SDLP celebrate their left of centre Labour leaning.

    In other words who among the Northern Nationalist middle class are going to vote for right of centre political parties ?

    I am not going to make myself thousands of pounds poorer waiting to find out.

    Stormont cant be trusted with Tax varying powers when they have the option of putting them up

  • It has got nothing to do with unionists wanting to stop SF.

    But you just said

    Tax varying powers to NI will inevitably mean tax raising powers.
    If Ruanne got her hand on a tax raising lever – be afraid – be very afraid.

    So is it about stopping the “re-distributive Marxists” of SF or isn’t it?

    2. You can have the same objective of what you are getting at by UK central Govt reducing the NI subvention meaning they will have to do the same or less with less money.

    So its fine if the UK government has power over tax but not Stormont? Isn’t this just saying that the natives can’t be trusted to govern themselves?

  • John East Belfast

    Andrew

    I want to stop SF for a whole lot of reasons and what I have high ligthed on this thread is one of them.
    It is you who are trying to bend that into some unionist smash SF for the sake of it – not me.

    The natives at the minute cannot be trusted with the power to raise taxes in my opinion – to me that is a national government decision – Wealth Re-distribution is not for small regional legislative authorities.

    Their job is to manage their budget and decide on priorities in accordance with their voter’s wishes

  • Munsterview

    “……….. They dont feature in the 26 counties both because of their historical baggage and also the fact they are seen as tax raising Marxists……..”

    John, Sinn Fein do feature in the South, but not as much as they could or should.

    In my personal view and that of a few other like grey heads also, Sinn Fein have not taken the war to Fianna Failure as they have had to play cagy in regard to the North and the Good Friday Agreement to make sure FF stayed onside.

    Gilmore & co are not pulling their punches and neither did Joe Higgen’s group. Their results speak for themselves . The battle lines for the next election are already drawn up and if Sinn Fein are to impact in the South they need to come out fighting, not shadow boxing !

  • GF,

    I love the way you define political maturity by whether people agree with your point of view. 😉

  • I want to stop SF for a whole lot of reasons and what I have high ligthed on this thread is one of them.
    It is you who are trying to bend that into some unionist smash SF for the sake of it – not me.

    It was you who brought up SF. And I don’t doubt you have rational reasons for opposing them – I’m not exactly a fan of them myself. It is the method by which you oppose them that I am questioning – you seem to be happy to corral them in a system where they can do least harm, whereas I am arguing that the only way to defeat a political opponent is by persuading the electorate to vote for someone else. Your argument is fundamentally a defeatist one. If you had confidence in your ability to win nationalist voters for a centre-right party you wouldn’t be making it.

  • John East Belfast

    Andrew

    At the last General Election the UUP offered the electorate (including these middle class right of centre catholics) the opportunity to vote for a national party with clear right of centre views – however they clearly voted for SF & SDLP, if they voted a all.

    I am not a defeatist – just a realist.

    You seem to be under the illusion that SF & Unionist Parties are competing for votes ?

    Anyhow as I said it is not just SF & SDLP with instinctive tax and spend policies there are no shortage of unionists with similar views along that sepctrum.

    As I said as someone who pays taxes here (unlike you) I dont trust Stormont with Tax raising powers

  • Comrade Stalin

    John,

    The comment about the “benefits class” is revealing. Prods claim the dole as well. An important thing to remember is that SF in recent years have enjoyed lots of support among younger, middle class, often university educated, Catholics. All other things assumed equal, my suggestion is to give them the powers and see what happens. Any tax which hits a significant proportion of their vote in the pocket, for reasons they can’t justify, is likely to curtail their support.

    Note how over in Dagenham the BNP lost every single one of their seats. This is consistent with a pattern that happens with far right parties across Europe. They tend to get voted in as some kind of protest; they make a mess of things when they’re in office and accordingly piss everyone off so much that they are quickly voted out again.

    For democracy and political change to work properly, the politicians need to have power.

  • Comrade Stalin

    John, having different VAT rates in different parts of the UK sounds like a recipe for lots of bureaucracy, red tape, and lots of smuggling and avoidance. On top of everything else, now you’d have to figure out what the final destination of the goods are (within the UK) and HMRC is going to have to expect your records to make sure you aren’t fiddling. So are we going to set up HMRC customs posts at the airports and shipping ports to pay the extra VAT on anything “not for personal consumption” ? How do you stop people shipping goods to mainland Europe and then on to the mainland UK ? This is a daft idea and I can’t believe someone who argues that he has an eye for business would propose it.

    I think John Major was right back when he said that the temporary cut in VAT was a waste of money, they’d have been as well taking the money out and burning it. I suspect there is enough price elasticity around that tinkering with VAT either way doesn’t change things that much in the grand scheme of things in terms of economic activity.

  • John East Belfast

    Comrade

    What is very revealing about me stating that a disproportionate share of the SF vote derives from socio economic groups that wouldnt care about higher taxes and higher stormont spending ?
    And I didnt dispute that many unionist politicians have no qulams about spending other people’s money either.

    However there is greater choice within unionism and the SF roller coaster is not about economics but is a revolutionary plan that many are prepared to endure hardship in the name off and will vote – in the medium to short term at least – for regardless of the rest of their performance.

    Giving tax raising powers to such an environment would be madness unless you have no money or no property.

    SF are idealogues – very dangerous people to have power.

    We have seen that with Ruane in Education where she makes no secret that her motivation is social engineering through education.
    That has motivated her attitude to 11+ and why she has shown no desire to discuss compromise. We saw the same in her attitude to nursery places where she argued that a child from a “disadvanatged background” should take precedence over a speciall needs one from a better off family. Her attitude to withdrawing all funding to the private sector is another case in point.

    Can you imagine if she was Minister of Finance with a tax raising lever at her disposal – no thank you.

  • John East Belfast

    Comrade

    There is no reason why VAT at 15% at the point of supply in Northern Ireland would cause any problems for HMR&C.

    The whole point is to target Retail, restaurants, hotel rooms and services supplied within NI. It wouldnt have to be for manufacturers – although that wouldnt be a problem either as a GB customer buying at 15% from NI and selling on at 17.5% to their customer is simply entries in the UK VAT return with no net cost to anyone.

    This would reduce the cost of NI living thus enabling a reduction in private and public sector wages and also greatly increase NI as a tourist and conference destination – especially for GB.

    I wouldnt have that 5% energy either – once again for supplies to NI addresses – reducing the cost of living further

    Our natural sea border will prevent major disruptions to GB trade.
    Yes people will bring a van over to Ikea Belfast if they lived far enough north in England but it would have to be for a big purchase.

    VAT is a regressive tax that hits the poor – there is no reason why that same logic cannot be applied at the national level – ie poorer regions of the UK could have lower VAT – so long as it didnt disrupt the UK tax take.

    The natural sea border would facilitate that.

    Messing about with Corporation tax on the other hand would totally upset the UK tax apple cart

  • At the last General Election the UUP offered the electorate (including these middle class right of centre catholics) the opportunity to vote for a national party with clear right of centre views – however they clearly voted for SF & SDLP, if they voted a all.

    Shouldn’t that be “middle class right of centre unionist catholics”? Why should nationalists vote for an explicitly unionist party?

    I am not a defeatist – just a realist.

    Potato, potahto.

    You seem to be under the illusion that SF & Unionist Parties are competing for votes ?

    Not at the moment they’re not, because none of them are willing to do what needs to be done to attract cross-community votes. And as long as they fail to do so, elections will continue to be a tribal headcount. You may be content to let this continue, but I am not.

  • Comrade Stalin

    John,

    I think the sea border thing would lead to a situation somewhat similar to that observed with France and the “booze cruise”, except instead of booze, there would be everything that is VATable. Did you notice how Tesco and Amazon do a lot of their order fulfillment from Jersey due to the lower VAT rates there ? That’d happen in NI, you’d get businesses setting up order fulfilment centres here and closing their operations elsewhere in the UK. I’d see something like this sowing divisions in the UK and being rather damaging to the union, with lots of people complaining about unfair treatment.

    Like you I am not convinced that the corporation tax thing would be workable. It would be nice, but as I’ve said in the past, no British government is going to oversee a scenario where the City of London ups sticks and moves to the Titanic Quarter.

    What might work, however, would be a move to set up small tax islands, something like the IFSC in Dublin, where a limited number of companies doing certain kinds of work can obtain certain tax advantages by setting up their businesses there. UK regions could then apply to host one of these and the UK government would agree the terms.

  • John East Belfast

    Comrade

    As you know Food and Books are Zero Rated throughout the UK anyhow so I cant see a major issue with Tesco or Amazon.
    Yes Tesco sell more than food and somebody might order a TV etc but then it has to be delivered across the Irish Sea and hence the 5% VAT saving would be eroded.

    I wouldnt reduce the cost of alchohol – certainly not Off Sales – we have enough drink problems here.

    However I might do it in restaurants where food is being served although the pubs would try and get round it.

    However if we did something with our Indirect taxes on clothing, energy, restaurants and hotel rooms we would reduce our cost of living and boost our tourist industry.

    You would have GB & Europeans visiting Belfast for weekends to stock up on Designer Labels.

    Indirect Taxes are a very quick fix for NI – we saw how the border region at least was boosted by the lower VAT and weaker currency last year. The infrastructure is already there to cope.

    Messing around with CT to attract FDI – if it worked and was allowed – will take years to get off the ground and the NI economy will be on life support by then.

    The best way NI can realistically increase its Exports in the short term is via Retail and Non Northern Irish shoppers. We should be making it attractive for them to visit

  • Peter Fyfe

    Cynic a shinner staffer? I would do a Maradona and run round Belfast naked if that was true. You don’t want to see that!

  • Peter Fyfe

    There are problems thinking a special approach can be taken to NI within the UK as a whole. These regional economic disadvantages exist within the whole of the UK. Outside of areas such as London and the South-east, Manchester and Aberdeen many people will want this special treatment and surprisingly their votes mean a lot more to the government as our parties are irrelevant in Westminster.

    Some on this thread seem to think attracting cross border and tourism spending will fix an economy that relies on public spending so heavily, catch yourselves on. Ireland was successful because it developed a model that had a high volume of UK and US imports. (Yes, it is not so well now but would be much worse without it’s continued exports and financial services). A change in VAT is not going to attract these multinationals which a well educated English speaking country is silly not to look for. But us economically stupid taigs probably can’t add up properly. Sure we just vote for Marxists while unionism votes in that party that missed the enlightenment but we are to believe without any evidence that they actually have a grip of economics. I am not too sure stupid generalisations will solve our problems though. The economically prudent DUP done a great job with the Maze and Local government in being prudent with spending. One of the more positive decisions I have heard recently was a grant to the Kilkeel based firm that makes aircraft seating and we are to get rid of that? Why should we not just encourage them. Whether you cut some of their business rates or subsidise their R&D will not make much difference to government coffers. It is much easier for HMRC as well with Invest NI being the beurocrats that deal with the issues. It will be no different to the hundreds who would be needed to be employed to administrate differing VAT rates throughout the UK. I imagine the staff at HMRC would walk out in mass at such a proposal that would complicate their working lives so much. It is a silly suggestion to think this could be allowed in NI and the rest of the UK who experience regional disadvantages would be told to shut up.

    Though John, I do agree with you that our local politicians have not shown themselves to be responsible in many issues at all and I would be worried about giving them tax levying powers, I just don’t apply your orange tinted glasses to it.

    I was also surprised not to read any comment regarding how exchange rates have changed since we realised the pound is a better bet than the Euro. Not a great encouragement for us when it comes to cross border trade or tourism for that matter. (almost down 10% since the start of April)

    I can only come to the conclusion that we have to look at the make up of this state when it is so hard to make any part of it competitive, except for a few border regions when currency traders in Chicago decide they like the euro better than the pound. They are not thinking that anymore either. I don’t have the solutions but these half baked solutions to excuse this place from having to look at itself is not going to help anybody bar the consultancy group being paid for the report.

    Is there any point in dealing with the issue of Catholics not voting for the ‘non-sectarian’ UUP? Why can’t we just see the light? Don’t make me laugh.

  • medillen

    We could save a similar amount of money by scrapping the titanic quarter, the ridiculous money being paid under contract to Bombardier, and all the superficial upgrades to belfast city centre and the silly wheel. If you want to save money look east not west.

  • John East Belfast

    Peter

    NI within the UK to London is no different than Donegall within the ROI is to Dublin.

    Geography and population densities will inevitably create regional disparities and the job of politicians is to enure there is a tax and regulatory framework that both provides the optimum national tax take as well as exploiting the comparative afvantages of the regions.

    In terms of the former people have to realise that the manadarins in Whitehall decide that there is an optimum tax take for the UK – it might disadvantage certain regions but they realise it is better to have one rate (currently 28% but to be 24%) and then bung the regions Subsidies – currently by way of the Barnett Formula.
    Therefore when looking at the country as a whole I simply dont get this obsession with balancing all the books in the regions – it simply isnt possible.

    It could be tried of course with taxation.

    For instance the ROI – an independent country – with a small population and little innovative industry of its own decided that the way forward was FDI and the way to attract this was via a low Corporation Tax. They then had higher VAT, Income Tax, Stamp Duty etc and also access to susbtantial credit to make up the shortfalls.
    Essentially the ROI decided to give the corporates a cheap ride in return for jobs and put the real tax burden on the small populice which is now also substantially burdened with debt.

    NI meanwhile is an inegral part of the 6th largest economy on the planet and as such will ultimately enjoy the fruits thereof. We dont have to contort ourselves into a tax knot to balance the NI books if by doing so (eg lower corporate taxes) we upset the whole UK tax applecart.

    However that doesnt mean we dont try and if we are going to use tax levers then we should use those ones that will have minimum affect on the UK tax balance. I say Indirect Taxes because our natural sea border with GB will assist with that. It couldnt be argued for Scotland or NE England because that would destroy the economy in those parts of GB where you simply get in your car and drive.

    You way over estimate the problems a 15% VAT rate in NI for certain types of supply would cause for HMRC – indeed it would not cause them any additional control problems at all than what they currently deal with through existing resources.

    I am not sure why you made that “Orange tinted glasses” comment – I made it clear that all politicians in NI had a fair degree of tax and spend instincts but I thought SF were particularly proud of their far left pedigree if you thought I had been singling them out

  • Munsterview

    John,

    I have been following your proposals so far and one problem I see with your arguments : you view the Six Counties in terms of the Six-Counties per se or in terms of the overall UK economy. Fine as far as it goes but the border is not the Israeli Concrete four meter high wall, it is just a line on the map to most people living there.

    Shoppers in a line from Galway to Dublin North have flocked to the Six Counties in recent years while bargains were to be had there relative to the South and I have no doubt the same would follow from North to South if the economic conditions favor shoppers sufficiently to make the trip worth while.

    Some years back when on a trip to Poland, several working class Dublin women were part of the trip. They were having a holiday buying clothes and by selling half of what they bought in Poland they had a free trip and clothes. Ordinary people will always find a way to stretch a pound……. or euro, it is part of survival strategy!

    There are three main economies on this Island, that of the South, that of the Six-Counties and that of the Interface economies between both groups. The Cross Border Sectariat in Armagh is well aware of this reality, they do not want large spending groups pingponging between both economies, it do not make for stable economies or for contented economic planners or business people.

    Behind the scenes an All Ireland approach is a reality in certain matters : unless this is recognized and there is awareness of this fact the bean counters on both sides will do what bean counters do everywhere; they will work out joint ways to better screw the public in both economies!

    To get back to my previous posting, we are an offshore island twice removed from the European mainland and the English Whitehall Mandarins see the Six Counties in terms of Ireland, not Eastbourne or Essex!

    Letterkenny looks to Derry, not Dublin when they think of ‘ going to the City’, the natural way South for much of Donegall is through the North, these realities already exists and economic perspectives should take note of this reality!

  • John East Belfast

    Munsterview

    Her Majesty’s Govt will act in the best interest of its own Treasury and so it should – just as the Irish Govt should.

    NI & ROI are fiscally competing jurisdictions and no amount of north southery – unless it is of mutual benefit – will change that.

    What you see as a natural island economy I see as a natural islands economy

  • Sean Og

    Free travel for over 60s to be phased out in England. The qualifying age will rise to 65 in lne with Retirement Pension Age.

    Will Conor Murphy have the balls to make such a sensible but unpopular move here?

  • Munsterview

    Not if he wants to keep them !