Pressure from the cuts – the big incentive to learn how to govern?

With less than four weeks to go, the Hearts and Minds round table clearly shows the distance the Assembly rank and file have to travel before they come to terms with the cuts of the comprehensive spending review. Without a co-ordinated joined up approach by the whole Executive,  Sammy Wilson can do little except forecast gloom and doom. As I know from my contacts elsewhere, NI politicians are regarded as living on a different planet.

We can nevertheless guess at the shape of the issues that preoccupy the civil service.

The block grant shaped by the Barnett formula will survive the downturn for some time yet, despite longer term reform for Scotland and Wales.

NI will continue to argue for exceptional treatment on grounds of its remoteness, demography and the supposed threats to stability. This may prompt a further pause for reflection but it is hard to see how it translates into a winning formula. The big question is whether the Treasury will regard the public sector as too big to fail, or dump another 40 000 onto welfare, or back some job shedding along with a pay freeze.

Owen Paterson will lose a battle to create a special economic zone with lower corporation tax any time soon, in the face of unanimous objections from all parts of GB. This makes sense only if it puts NI on a fast road to a united Ireland. In the meantime the Executive would have to make up an extra £250 million in lost revenue.

Victor Hewitt’s slipped-in argument for cuts based on output rather than Barnett inputs is doing the rounds elsewhere ( see, Can A Deal Be Done?). Cuts based on lower tax receipts and allowing the Executive to keep some efficiency savings would reduce their impact while increasing the incentive to make further efficiencies.

Pressure for leaner, smaller government and the deferred councils reform should prove irresistible and must not be compromised by manoeuvring to try to cheat SF out of their fair share of power.

Structural inefficiencies connected with political power plays which have nothing to do with law and order like too many surplus school places and surplus A&E capacity in Belfast must now be tackled.

The Executive must end populist measures like the rates freeze and water charges exemptions. They can also raise capital by public assets sell- offs of Belfast Port and parts of the Housing Executive stock when the prices are right.

Close supervision from Whitehall will continue through the downturn until the Executive members learn how to govern. If the lesson is learned, it could be the silver lining in the dark clouds of the comprehensive spending review. If the cuts don’t make them learn,  I don’t  know what will.

 

 

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  • White Horse

    Do you know your weakness, Brian? You have never been elected to do anything and it shows.

  • Damian O’Loan

    “The Executive must end populist measures like the rates freeze and water charges exemptions.”

    This myth that not charging for water is irresponsible should be challenged more. It is simply a potential source of revenue among others. I pay for my water currently and I can assure you it doesn’t directly lead to responsible or good governance. Yes, the Assembly coffers will need filling. But water charges exist on a progressive tax basis already – the decision is whether to end this. They are not a magic wand.

    “Owen Paterson will lose a battle to create a special economic zone with lower corporation tax any time soon, in the face of unanimous objections from all parts of GB.”

    I understand the objections to be based on favourable treatment for NI, but I wouldn’t discount a Conservative government reducing the UK’s corporate tax rate to match or undercut Ireland’s. Which brings us back to the questions of potential revenue sources and responsible government.

    “Pressure for leaner, smaller government and the deferred councils reform should prove irresistible and must not be compromised by manoeuvring to try to cheat SF out of their fair share of power.”

    While SF will have difficulty maintaining what remains of its credibility on the left while implementing a smaller government programme, I would have thought the risk is that the SF-DUP axis will use the challenge to further monopolise what power is held by Stormont.

    In general, I wouldn’t underestimate the possibility of the elected representatives bickering and the NIO/NICS supplying the actual cuts. Which brings us back to the question of smaller government. But there have been signs of independent decision making – Alex Attwood’s challenge to maintain social security for the most vulnerable, for example, or arguably Ford’s rejection of Prison Service reform, if he is not using cuts as a fig-leaf for his political preference. Which is a big if, and takes us back to the question of abusing the situation in favour of party political advantage.

    “If the cuts don’t make them learn, I don’t know what will.”

    I completely agree. Btw I would, in a NI context, take White Horse’s comment as a compliment.

  • fitzjameshorse1745

    The “Cuts” are no incentive to anything…..especially not good governance or accountability.
    The system which rather inconveniently was applauded and celebrated by just about everybody and voted for in 1998….actually guarantees governance to just about everybody. There is no incentive for any “voluntary coalition.

    The system is already in place.
    UUP/DUP are competing for 50% of the votes.
    SDLP/SF competing for 40% of the votes.
    Maybe somebody is sophisticated enough to say “Id vote for cuts” but how does that actually work in Norn Iron where the public sector is so big an employer AND shops, business etc actually depend on it.
    Any attempt to portray Norn Iron as an ordinaruy place in terms of the political arrangement, votes is ….rightly or wrongly …not reality.

  • Brian O’Neill

    I think the fundamental problem with northern Ireland is that all the politicians take decisions based on their local electorate. All politicians do this but I think the problem is compounded with NI being so small.

    No one wants to make any tough decisions as they know they will get hammered at the polls.

    For example Belfast is a city of 300,000 but has 3 A and E departments when 1 would make sense, but the problem is each is in a different constituency and the local politician goes nuts if their hospital losses out.

    The scale of the cuts will be so drastic that all the folks on the hill with tear strips into each other. This has already started. I think strain of the cuts has the potential to collapse Stormont. Our politicians have neither the guts, leadership or vision to get us out of this mess. They are more comfortable on the safe ground of arguing about gays and GAA than real politics.

    Tourism and inward investment have the ability to drag us out of our overreliance on the public sector, but thanks to dissident activity NI name is again mud throughout the world.

    Things look very gloomy indeed.

  • DC

    No need to worry, Peter Robbingson and Martyr McGuinness will bring everything into order.

  • Glencoppagagh

    ‘Maybe somebody is sophisticated enough to say “Id vote for cuts” but how does that actually work in Norn Iron where the public sector is so big an employer AND shops, business etc actually depend on it’

    The answer is that nobody votes for cuts so no political party supports cuts in practice, let alone on principle. This is why Stormont may well not survive the process.

    The only option is to encourage the dissidents to get busier especially across the water. That might teach the Brits not to mess with our remittances.

  • jim

    they have brought everything in to order.their secret fund for ghetto areas where the sheep follow orders must be first to go when the so called cuts come.these bru scroungers can start lifting litter ect x these so called community workers grants will save millions

  • Boglover

    “abusing the situation in favour of party political advantage.” Heaven forfend!
    As to NIO/NICS delivering the cuts, you have a higher opinion of them than most, Damian. I see no way they have the vision or will to to this.

  • aquifer

    They will never agree to cut corporation tax and their own budgets. On the face of it the private sector will stagnate, unless somebody can support a lot of local R&D led startups and hope a few will come through and grow fast.

  • slug

    “Owen Paterson will lose a battle to create a special economic zone with lower corporation tax any time soon, in the face of unanimous objections from all parts of GB.”

    I think the Conservatives could well like to see NI going for a low corp tax, because they would like an argument to bring it in in the rest of the UK. NI could be an experiment that provides such an argument.

    As for whether lower corp tax is a good idea. Basil McCrea and Esmone Birnie have both pointed out that we must not think lower corp tax is the main issue in growing the economy. Training and education is. A very small % of our companies actually pay the higher rate (which is anyway coming down to 24% UK wide, the lowest rate among big OECD economies), and most pay the lower rate, which is coming down to just 20%, which is not very high.

    Birnie points out that lower corp tax isn’t very targeted – a lot of the gain goes to Tesco shareholders. What about spending the money on R&D and other high-tech investments?

  • Framer

    Civil servants are queuing up to sell their jobs before redundancy payments are reduced by the new Superannuation Bill.

    Given that there now a pay and recruitment freeze it rather indicates they were not needed in the first place.