Osborne defies local expectations with a £200 million boost

Anyone who has watched the twitter feeds from hashtags like #budget2012, will have noted just how over heated people are getting over a terrible budget coming down the track. That suggests to me that the government is trailing a doom it does not quite intend to deliver.

Something like the trick played by George Osborne today. It was enough to prompt Conor Murphy to issue this doom laden warning this afternoon:

Sammy Wilson’s speculation that measures expected to be taken by George Osborne to stimulate the British economy could cost the Executive block grant another £130 to £150million must be resisted. This is just the latest example of the negative impact of the Executive not having control of its own economic levers.

It turns out that Sammy’s ‘speculation’ was well off the mark. It seems the Chancellor is giving NI another £200 million to spend on infrastructure projects capital.

Which sort of cut Conor off at the pass:

Sammy Wilson’s expectations would seem to confirm our analysis. There are no votes for the Tories here. Therefore the sooner we succeed in having maximum powers transferred into local hands the sooner we can start designing our own fiscal structures and plan our own programmes to address the needs of the people here.

[Ed, cough, don’t mention the water rates!]

  • BluesJazz

    The £200 million (over 3 years) to be spent on *capital* is a sweetener. All the devolved regions got one. The velvet glove concealing the ‘regional pay review’ iron fist.

    The South East of England is getting its reward in the long grass.

  • Mick Fealty

    Come on, more detail, please?

  • BluesJazz

    read through the BBC link.

    public sector pay is to be brought in to line with the private sector. In NI that’s a 40% gap down. Only in the home counties will there be no loss for state employment.

    The ‘review’ is certain to revise pay downwards and guess which part of the UK is most vulnerable?

  • This is what ‘rebalancing’ means. The ‘rebalancing’ that the NI Executive wished to implement from last week’s PfG. A reduction in the gap between public and private sector pay, and a significant drop in the numbers of public servants is the only way a Corporation Tax reduction makes sense.

  • The yokel

    Looks as if Westminster is pulling the plug on the NI public sector gravy train, so to speak. Quote from CBI in Sept 2011
    CBI Northern Ireland chairman Terence Brannigan said: “We have too many structures, with too many layers, employing too many people, often rewarded too highly while delivering too little to the people who ultimately employ them – the citizens of Northern Ireland.

    “Currently pay levels within the public sector are about 30% higher than those in the private sector and job numbers have increased dramatically over the last 10 years.

    “Therefore what we are saying is we must reduce the deficit between public sector and private sector pay and we must reduce the number of public sector employees.”

    Economic levers to C Murphy MLA – the DUP move into mainland politics – please tell me these are jokes.

  • FuturePhysicist

    The CBI has gotten more or less its wishlist bar the 50p tax issue, near fully privatised university degrees yet “industry” complain they’re not getting the skills they want, massive public sector cuts yet complaints about consumer confidence, now capital expenditure will increase probably become public works that aid the creation of office blocks rather than public infrastructure.

  • Zig70

    Mr Osborne, is panicking. Austerity is having the effect of strangling the economy and he’s now dithering to match the Euro dithering. The IMF third world debt tactic being used to control national economies rather than rebalance them is what is choking any recovery. The way we are going we’ll still have this mess when my kids look for jobs.

  • Toastedpuffin

    “Currently pay levels within the public sector are about 30% higher than those in the private sector ”

    Can anyone point me to the data used to come up with these figures? I used to work in the public sector – and left for a better paid job in the private sector. As did a number of people I knew about the same time. What’s being compared here?

  • The yokel

    The complete piece is at the above link. The source of the data is not acknowledged. My anecdotal evidence, for what it is worth, would be that when pensions are taken into account, NI public sector pay is higher than the equivalent in the private sector.

  • Toastedpuffin

    Yokel, I’m guessing some pretty nifty mathematical gymnastics are involved in arriving at the 30% figure.

  • The yokel

    TP, I’m sure if one was to ask them where they got the 30% from, the answer would not be quite so simple.
    In fact I think I will ask them – start the e-mail The Yokel and a Toasted puffin would like to know…

  • Toastedpuffin

    Yokel, I’m tempted to suggest that the answer is very simple – they were offered a selection of statistics that were in some way justifiable (sort-of) and they picked the one they liked best. Only tempted mind, because the CBI I’m sure are a sturdy bunch of lads and ladies (but mainly lads) who wouldn’t stoop to that level to support an argument…

    Expect a reply to your email anon. Those guys work non-stop, not like those workshy folks in the public sector.

  • BluesJazz

    The differentials are listed here:

    But there a lot of extraneous factors- Consultant heart Surgeons etc

    But it’s pretty certain NI will lose out big time.

    Silly of Sammy to put Housing top of the infrastucture budget when we have a glut of unsold properties and NAMA still to follow through.

  • aquifer

    Thanks BluesJass

    The public sector get paid more, and also have much better pensions and conditions, with better sick pay provisions and job security etc.

    If we want a vibrant private sector, we should reduce the pay of better paid public servants and use the money to boost the prospects and status of the private sector so they can afford to buy homes and also to go out more at night.

    If Sammy has any sense he will just buy some unsold homes for use by the Housing Executive, or fund some buy half rent half deals.

  • The yokel

    aquifer, we could start by reducing Paul Priestly’s income down to an “average industrial wage” following the fine example set by his old boss.
    If he had been in the private sector and done something of equivalent seriousness he would have been out the door before his feet touched the ground.

  • jthree

    The £200m is but a drop in the ocean compared to the deflationary effect of what amounts to public sector pay cuts until at least 2014.

    The domestic consumption sector (shops, pubs, hotels) will continue its bracing journey down the cliff face.

    Furthermore it’s going to take more than £200m to get the construction sector out of the deep depression in which it is mired.

    Murphy was entirely right to be doom laden – but for the wrong reasons.

    Also: “That suggests to me that the government is trailing a doom it does not quite intend to deliver.”

    Read today’s FT and get back to us.

  • jthree

    Also the pay differentials come from the latest NISRA Annual Survey of Hours and Earnings


    What Osborne announced on his intention to undermine TUPE is manna from heaven for Terence Brannigan’s old company, Resource.

  • Toastedpuffin

    Thanks BluesJazz & jthree for those links. I’ve only had a quick scally so far, but what I’ve read is very interesting – not least because it runs contrary to my own experience.

  • Old Mortality

    It really wouldn’t matter that average pay was higher in the public sector if it weren’t for the fact that so many people receive it. Say the public sector only accounted for 10% of the working population, pay could be twice the level of the private sector because the other 90% could comfortably support them.

    The problem is simply that too many are paid too much

  • BluesJazz

    Old Mortality

    True: especially in Northern Ireland.

    Part of the problem is the increment system, no-one in the public sector gets a flat rate of pay. Even with a pay freeze, civil servants get an extra grand a year simply by being on the scale another year. Same for nurses. teachers etc, so the pay spirals upward. Even with a freeze.
    And 6 months sick leave on full pay every year.

    Why would anyone want to work in the private sector?

  • Nice points above. Even nicer calculation.

    Would the generality of Sluggerdom agree (or not) that £200m out of £5,000m is not totally out of proportion as a per capita distribution? Now, were it a needs-based distribution, it would be a different matter.

    Still, for obvious reasons we did a wee bit better than most parts of England which didn’t vote Tory (especially where — as in Kettering, a major beneficiary — a prominent Tory MP would be done over by the redistribution, and a reasonably-safe Tory patch be going highly marginal).

    And BluesJazz @ 7:45 pm [like his taste in music, all the same] has it all a-cock. Most public-service automatic promotion scales are long, long gone. Where they remain, they persist for only a very, very short period of years. So, think on: most (and each year increasingly more) are stuck on a maximum pay-grade, with no hope of promotion to the next grade. Brown-nosing helps, of course.