Northern Ireland Executive has been ignoring the financial crisis since 2007

In the BelTel, Liam Clarke has an excellent summation of just how Stormont’s Executive got itself into this mess:

The origins of the crisis lie in 2007, the final year before the property crash, when the Executive parties agreed a number of eye-catching giveaways. Water rates were set aside, at a current cost of £180m a year; our leaders held regional rates down, giving us the lowest household taxes in the UK, and there were also free prescriptions for everyone and free travel for the over 60s.

None of these benefits are available in Britain and they aren’t covered by our block grant subsidy from Westminster. The hope was that we could sell surplus public sector land into the booming property market to fund them, but that proved impossible.

The Executive made the same mistake as the banks – it gambled on property.

Now years of cutting and trimming to keep promises most politicians were too scared to revisit has left us with no fat. Health costs are rising and we have run up against a Tory-led government that is unwilling to bail us out at a time when it is imposing cuts in its own constituencies.

After all the airy rhetoric about flags, the border and gay blood bans, balancing the books has turned out to be the most serious challenge the Executive has yet faced. That is the real business of government and it will define this Executive in a way that other issues have not.

In retrospect, a lot of the things that concerned politicians looked suspiciously like distractions while they stuffed bills in the drawer hoping that they could indefinitely avoid payment.

For good measure, why not throw in the bailing out of the Presbyterian Mutual Society too… Having ignored the recession, we may now see the very people Martin McGuinness once threatened to put manners on roughly shove the politicians out of the way and cut their budgets…

Ahem, it is not as though they were not warned about it? A NICVA commissioned pre budget report in 2010 in particular that OFMdFM’s current lines in the sand would be unsustainable:

It is our view that totally protecting large spending programmes in the face of deep cuts to the overall block is simply not feasible. Both health and education will need to bear some of the burden of cuts if the Executive is to maintain a meaningful presence in other spending areas.

Hmmmm…

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  • Gopher

    Integrate education, getting rid of the overlapping property and staff and Im sure Westminister and US will reward such forseight making. That would take care of most of the budget deficit in one swoop. Make a permenant deal on the past and parades and Im sure that wont stretch Westministers or the US’s generosity. End the narrow happy clappy religious and secterian interest on Sunday opening of Businesses and blocks on its location ie John Lewis again you will see goodwill. End rediculous blocks on infrastructure improvement that plaque every such development here (ie lengthen the City airport) and Im sure Westminister would again help us. In general to surmise take practical steps rather that just pleading with our hands out.

  • AndyB

    I would add that they have known that the big cuts to the block grant were coming this year since they persuaded the Treasury to backload them (ie defer the biggest cuts) in 2010. Welfare Reform aside, they had fair warning, and don’t appear to have done anything to prepare for it.

    Gopher, I think that Westminster is in the mood to ignore all pleas for handouts, simply because they don’t have to offer a single extra penny.

  • Dan

    Hooray for the so-called crisis. It’s been long overdue. The sooner people feel the impact of cuts, they will realise there are consequences to voting for incompetent fools (just to keep the other lot out), the sooner things will change.

  • Jag

    Bloody hell, 13% cut to most departments? Not all of the Health budget protected?

    A devastating cut to salaries and headcount, say the unions (as they would, but this time, they’re on the money).

    Get real says Sammy Wilson in reply – you put the family silver on ebay (Sammy probably the only one of the chancers in Stormont you’d trust to sort out the local economy).

  • Nevin

    ” free travel for the over 60s. None of these benefits are available in Britain”

    If you’re over 60, or have a disability, you could be eligible for free or subsidised travel to get around Scotland and your local area.

    The National Entitlement Card allows people aged 60+ and people with a disability to travel for free on local or Scottish long distance buses.

  • Is this union with England reduced us to shrugging our shoulders & accepting that we must “live within our budget”? Do we accept whatever Westminster throws our way?
    These UK wide cuts are not the answer to the problem faced after the bank crash. The UK’s public debt is £1.4 trillion. Yes trillion. The cuts planned by Westminster for the UK are in the region of £85 billion over 4 years ie 6%. At this rate of going it will take 70 years to pay off the debt. Except that in spite of the cuts the debt is increasing as tax revenues fall due to rising interest payments (£60 billion pa), increased unemployment & reduced consumer spending. Public sector debt is up by £100 billion in a year. So it will probably never be paid off.
    So why do we have these cuts? Tory party dogma & pathological need to punish the less well off.
    Ask yourselves who is this £1.4 trillion owed to?
    Answer: private financial institutions – in many cases the very ones that were bailed out by the government. Now if that is not an example of collective madness I don’t know what is.

  • Jag

    If the Sinn Fein position in the South is “austerity is not working” and “you can’t cut your way out of recession” and “no privatisation, selloffs” then how can it support measures in the North which are tantamount to austerity? The mooted cuts can’t be dealt with by efficiency, cutting wastage or revenue raising alone, austerity is coming in a way not hitherto seen.

    One thing’s for sure, SF is being closely watched in the South, the arrows have been loaded, the bows drawn back, and they’re just waiting to accuse SFers of incompetence, voodoo, illiteracy, innumeracy and most of all, hypocrisy.

  • Old Mortality

    Cushy

    It looks as if you have little understanding of public finances. The current cuts are not part of a plan to eliminate the national debt in its entirety, merely to reduce it to a sustainable level.

    Where do you get the idea that rising interest payments cause tax revenues to decline?

    Have you not noticed that unemployment has been falling in the UK for some time and consumer spending is increasing?

    If you bothered to check the statistics,(http://www.ons.gov.uk/ons/dcp171778_381131.pdf) you would find that the ‘bail-out’ of banks is making a significant positive contribution to public sector borrowing (£8.9bn in 2013-14).

    Finally, private financial institutions would never have needed to be bailed out if they had held large quantities of government debt instead of dubious loans and other property-related assets.

  • NMS

    Yes, the financial adjustments will bring the party to the end. There are lots of big projects to be cut. The madness that is the redevelopment of Casement Park surely should be top of the list. (VAT free) Clones will surely be a winner out of this. All of those “community” projects keeping former criminals in reasonable comfort and not robbing banks or little old ladies must surely be coming to an appropriate dead end.

    The reintroduction of water charges was will be a boon to Trots in both UKNI and Ireland. Indeed it looks like water charges in UKNI may be higher than the Irish ones. There looks like there is a lot of humble pie to be consumed and red line issues to be erased by Provos. Mary Lou’s already ample waistline will be expanding further. The power walking around Cabra has done little for her to date.

    The real worry for all in UKNI is that these adjustments will be followed by a series of further reductions coming from two angles. Firstly UKNI will take its proportion of the post election reductions required across the whole of the UK. Secondly, it is likely the excessive payments some UK regions get is likely to fall. Permanent austerity is coming to a devolved parliament near you.

    Dependence on hand outs rather than real economic activity is the actual problem. It seems hard to see how books can be balanced without pay cuts, staff reductions, proper user related charges and service reductions. Ouch!

    From a political perspective, the cuts are likely to change how some see their political parties. Will UKNI see the loyalist hordes voting for some of Trotsky’s acolytes? Can Eamon McCann and the merry bands of SWP And SP cadres lead the struggle or will we see a return to violence?

    The SF twitteratti are maintaining radio silence. Máirtín ÓMuilleoir has not tweeted for 24 hours! Gerry Adams is still dreaming about a “fragrant penis” and dogs. Though maybe there is a link???

  • In my Assembly speech in Nov 2007 I made this precise point when debating the draft budget for 2008/2011 I pointed out it was based on unrealistic assumptions and had a great hole in the middle of it.

  • NMS

    Gopher Oh, if it was only so simple. GVA for UKNI was estimated at £29,410M in 2012. So let us assume that it is £30,000M in 2014. The expected reduction is close to 3% of that figure, more than twice the economic contribution of agriculture to the UKNI economy.

    Closing a few schools or even a lot of schools will make little difference as the biggest cost is the teaching staff, allocated of course based on the number of pupils. Looking at your spelling, more schooling was certainly required in your case! The only way to reduce such expenditure is to reduce the number of children. Mobile gas chambers, would make the requisite savings you desire quickly at minimal cost.

    UKNI is already over supplied with retail outlets, many of which are dependent on Irish customers. The current strength of £stg makes shopping in UKNI unattractive.

    The UKNI economy needs to produce goods and services that others want to buy. This requires investment.

    (The figures are taken from Appendix 7.2, page 64 Autumn 2014 edition of the Nevin Economic Research Institute’s Quarterly Economic Observer.)

  • Michael-Henry Mcivor

    ” water charges set aside – lowest household taxes- free prescription for everyone and free travel for the over 60s ”

    And still reporters complain- with their wages they might not need none of the above- but the rest of us like this and would want more and more of the same-

  • NMS

    Michael, the core problem is that water and other local services are exactly that, local. Why therefore should anyone else pay for them? The difficulty for Sinn Féin is that they will now have to explain to their electorate that there is no such thing as a free lunch, shower or public transport.

    As good UK subjects, they must take their share of the medicine like the rest of the Queen’s flock. The real problems are only beginning because there are many years of adjustments required to bring both the UK and UKNI budgets into balance. Failure to control expenditure has led to the level of cuts, but at nearly 3% of GVA, it is going to be very hard.

  • NMS

    Brian, This of course is the problem with the Sinners and the others. They are full of unrealistic ideas based on silly outdated policies. When you consider the abuse given to the sustainable policies promoted by the Green Party/Comhaontas Glas, it is enough to let one enjoy them roasting on their spit. The Germans have a word for it ……..

  • Michael-Henry Mcivor

    There is a free lunch- and if the Brits want to spend billions dropping bombs in other lands then they should spend more here on people who want to live in Peace-the government gives the Queen several million in hand outs each year- all I am asking is that each of us is treated as equal- just one family should not get a free lunch for life- all of us should -the money is there but only the big bucks and big bombs are getting the big slice now-

  • Comrade Stalin

    What salary do you think a reporter is on Michael ?

    (clue – not much)

  • Comrade Stalin

    An excellent analysis as usual from Liam. (add our regional Air Passenger Duty cuts to the mix – the cuts are funded out of our block grant; estimated to cost £60m-£90m per year).

    I saw a statistic that our Department of Health budget is £4383m or about £2578 per head in NI.

    The NHS England budget is £94.2bn. This works out at £1777.

    It would be interesting to understand why are we spending at least 40% more per head on the health service in NI than in England. It can’t all be economies of scale, can it ?

  • Nevin

    “I saw a statistic that our Department of Health budget is £4383m or about £2578 per head in NI.

    The NHS England budget is £94.2bn. This works out at £1777.”

    Are you comparing like with like, CS. Our Department covers health, social services and public safety. That £4383m projected current expenditure budget [p79, pdf file] is for DHSSPS for 2011-12; the hospitals, community health and family health service segment amounts to about £3352m and this works out at about £1862 per head. I don’t know what NHS England budget covers.

  • NMS

    Michael, not Brits, UKs. The UK of which you are a subject , is involved in various external conflicts. Arrangements between the head of State and Parliament are a matter for discussion. If your member of Parliament chooses not to participate, well that is your local problem. If you oppose such expenditure, perhaps you should all to or replace your local representative.

    However, the issue of local services has historically been delegated to local authorities. A reduction in services equal to nearly 3% of Gross Value Added in an economy like UKNI is going to have massive effects.

    I am surprised at your attitude, if you represent people who will be hit. Unless of course you knew all along that there would be severe cuts. It is easy to blame someone else.

  • Michael-Henry Mcivor

    I am not a subject- I am a equal -you can subject yourself all you want NMS-

    ” there would be severe cuts “-

    Only amongst the working people and those who are on Welfare will there be severe cuts- the Royal family will still get free millions and those MPs that take the oath to that family will get a pay rise- the rest of us can eat cake-

  • Gopher

    Yeah the spelling is pretty bad, taught by history teachers who thought Vichy was the Italians and argued it, Geography teachers who spent the class talking about where they had been in the world and their made up adventures therin, RE teachers that were bigots, maths teachers who choked pupils just because they could, alcoholic english teachers and the usual pederasts that find their way into secondary schools the world over. All get pensions now. My fault I cant spell but nobody really marked a homeworked therefore noticed I could not, never noticed I could not count either. To do something about it would have involved work something you could never accuse the teachers I had experience of entertaining. I could read just fine and knew Vichy wernt the Italians despite being twelve never going to university and not being paid, so I decided to just read my way through school. Read my way through maths, science, history, geography etc etc etc and no one noticed. Infact nobody noticed . I left with no qualifications. The ciriculum was so dull you understand that I never read anything pertinent to the subject I found myself in and come the exams like Churchill remarked on sitting his exams they asked me nothing I knew and questioned me on nothing I did.

    1,900 million is roughly the budget for education (sic), you know that system that is failing working class Protestant boys well its failing the taxpayer. Nothing like ring fencing failure. Also we have massive duplication from administration to pensions to electricity all wasted. we have differing exam boards and we have plenty of schools in areas were the population is declining. We keep this crap system going because just like in Stormont sectarian division enables charlatans to make a decent living.So out of that 1,900 resource and 180 million capital budget your telling me integration wont make a dent in that. More than the 60 million to keep the NHS afloat. Not being educated did give me a certain degree of common sense but feel free keep RE teachers, education board administrators and their pensions and sack nurses while we wait for Northern Ireland to produce something other than “individuals”

  • chrisjones2

    Yeah. More for nothing. Is that now SF policy or just yours?

    And you do pay for water – read your rates bill

  • chrisjones2

    …but you are not equal ….she is the Queen and has a particular constitutional position and the duties that come with it. You dont. Shes worth a lot more to the UK (or Ireland for that) than you are

    When you are in Dublin – if you ever do go out – do you doss down at Áras an Uachtaráin?

    There is no longer a free lunch. Time to pay

  • chrisjones2

    You are a subject whether you like it or not my son

    ” the working people” a meaningless twaddle phrase

  • Michael-Henry Mcivor

    So chrisjones2 more than likely thinks the Queen is better than him and all his family-the Queen is no better or worse than me- why should she and her family get a free lunch compared to the working man and woman who have been paying their taxes all their lives-the Crown gorges whilst we starve more- that’s not Equal-

  • Jag

    Interesting, SFers and DUPers look as if they’re going to do a deal on budget.

    But, unions are going to strike in response.

    SFers have been courting the union vote (no left wing party anywhere in world has prospered without union backing) but now appear poised to royally p*ss them off.

    Interesting days ahead….

  • SeaanUiNeill

    Thanks, Gopher, for that clear, honest description of just why most of the population have no interest in ever opening a book ever again in their lives, after escaping from the educational “murder machine.” I know that I frequently mention this on Slugger, but have a look at Ó Buachalla’s edit of Pearse’s educational writings:

    http://www.amazon.co.uk/s/ref=a9_sc_1?rh=i%3Aaps%2Ck%3Aa+significant+irish+educationalist&keywords=a+significant+irish+educationalist&ie=UTF8&qid=1414662752

    Forget “sides” in this and look at what Pearse has to say about the education of the entire individual. Pearse the revolutionary was, I’ve often said, a dire waste of a real educational talent, compared at the time to the seminal educational thinker Maria Montessori. But that’s what we are good at here, wasting potential, as you so eloquently point out.

  • Comrade Stalin

    Fair point Nevin but surely we’re not spending the remaining £1bn on the fire brigade and social services ?!?

  • Comrade Stalin

    I’m sure it was you I explained this to recently

    There are only a handful of “British subjects”, namely people who were born between 1922 and 1947 in the Irish Free State and who later settled in the UK.

    The rest of us are British citizens. This is what the law says.

    Michael can, if he wishes, renounce his British citizenship. How do you know he has not done this ?

  • Comrade Stalin

    No, he isn’t. None of us are British Subjects. Most of us are British Citizens. A few of us will have renounced.

  • Comrade Stalin

    Actually, I doubt the Queen is worth anything to the UK.

  • Comrade Stalin

    Nitpick; the current cuts do not even start to reduce the national debt. They may reduce the deficit.

  • Nevin

    The detail is in that link, CS: Personal Social Services £866.9m, FARS £74.5m and bits and bobs.

  • SeaanUiNeill

    Actually, the actions of parliament to remove James II and his heirs from the succession never received (surprise! surprise!) his royal ascent, so going strictly by proper constitutional practice and even by customary parliamentary procedure, the Dutch Usurper could not function as monarch and his current successor, Liz, actually isn’t legally Queen, Francis II is our genuine liege lord.

    So, Chrisjones2, while she has been given a job and duties that are properly someone else’s and is, as such, receiving public funds unconstitutionally.

  • SeaanUiNeill
  • NMS

    one subject to a monarch and governed by the monarch’s law (2) : one who lives in the territory of, enjoys the protection of, and owes allegiance to a sovereign power or state

  • Comrade Stalin

    British citizens are not “subject” to the monarch and the monarch does not create laws.