Financial (and other) chickens coming home to roost

An Ulster Unionist MLA once described Green Party leader Steven Agnew to me as a younger Jim Allister with longer hair and less talent. That has often looked harsh but maybe true. However Sam McBride in the News Letter has an excellent piece quoting Agnew on the more fundamental causes of the current financial crisis at Stormont:

The North Down MLA said: “The fantasy they peddled was that you can get more services but pay less – that is simply unsustainable.
“The inevitable outworking of this lack of decision-making and co-operative working is that we can no longer fund public services properly.
“There is a difference between crisis management and management in a crisis and quite frankly what we are being presented with here can at best be described as ‘panic management’.”
He added: “The big Executive parties have led the people of Northern Ireland on a fool’s errand by effectively bribing and fooling the electorate into thinking that first-class services and appropriate welfare support for the most vulnerable can be provided without having to pay for it.
“Now their emaciated chickens have come home to roost and they are all very keen to blame each other.
“But the bottom line is, these parties were tasked with managing our economy in a realistic way and they simply failed.”
Mr Agnew said that Stormont ministers had issued “soothing words” to their voters to win votes based on policies which they knew were not sustainable.
He accused the Executive of having “gambled” on the property market seven years ago and refused to take unpopular decisions to raise revenue by bringing in new taxes or varying existing taxes.
“Now citizens of this country will have to suffer for this fundamental and catastrophic mismanagement of our finances as economic ‘lifeboat’ measures are being rushed in without proper scrutiny, planning or thought.
“So instead of easing in the budgets to mitigate against cuts over the past number of years and looking at areas where revenue could have been raised, such as lifting the cap on rates, they put up a smokescreen suggesting they were managing budgets effectively.
“They even went as far as asking the Tories for a cut in the block grant in the form of a corporation tax cut. What sort of message did that send out?”

It is worth noting that in 2011 Agnew was suggesting the plastic bag tax might reduce rates and has called for a reduction in corporation tax for smaller businesses (though not an overall cut) neither of which he is really saying now.

However, Agnew’s case is pretty compelling. The only point maybe to add to it is that throughout the boom years of the early naughties Tony Blair was so obsessed with his legacy that he was willing to throw what turned out to be unsustainable amounts of UK public money at Northern Ireland. This happened to a somewhat lesser extend in mainland GB but was to a proportionally lower extent and accompanied by significant structural change for example in the area of health.

In Northern Ireland money was thrown at problems almost it seemed without thought and a political system was created with far too many elected politicians. That system also mitigated against change with endless checks and balances and no opposition. Alongside that was the effective suspension of the rule of law for many individuals and organisations. Those chickens, even more fundamental than the ones Agnew talks of, and created by Blair, Powell, Hain et al. have also been coming home to roost.

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  • Sergiogiorgio

    I’m sorry but had it come from someone with a bit more economic credibility…a green for Godness sake. However we have to remember that our economic political guru in this part of the world is no less than Sammy Wilson. BYC hits proverbial on head. Everything is secondary to the political pantomime that gets played out here.

  • NMS

    The reliance on circular property transactions, similar to the children’s game “Pass the Parcel” was noteworthy in both UKNI & Ireland pre crisis. Neither had any viable long-term economic plan pre crisis and the politicians in both territories remain bereft of any real strategy to face into the next five years, let alone the next twenty five years.

    The cry from the “Anti-Austerity” crowd is that the cuts will only make things worse. And this is true. However, the excessive expenditure in UKNI could not/cannot continue, because the UK Government does not have the money. It also has other more pressing priorities. Had the Blair, Brown, Cameron largesse been spent wisely, then UKNI perhaps would be in a better position to cope. But the various vanity projects of both Sinn Féin and the DUP won out.

    It is also happening at a bad time. UK£ is stronger against the Euro (Sterling is almost at parity against a putative Ir£) than it has been for some years. This has massively reduced cross border shopping. Had Baldy Noonan taken on board the work and views of certain progressive think tanks and cut VAT, then the position would be much worse for UKNI business and employment.

    There are various ways the money can be saved. The ending of the various “community” projects, which keep ex? Provo & Loyalist thugs in pocket money and away from robbing banks and little old ladies, must surely be top of the list.

    An across the board cut in Public Sector salaries would also see service levels maintained, rather than cut if one follows the alternative of just reducing numbers.
    There may also be some room for savings by merging some facilities and resources. Exploring further cross border co-operation may also save money, but will involve job losses somewhere.

    However,, one way or another taking this amount of money out of the UKNI economy is going to hurt. It will reduce the money in the pockets for spending in shops, restaurants etc., even in clubs in West Belfast, hitting Mr Wells’ skinhead friends.

    But the real problem is that there are many more years of this because there is no more easy money. (E)migration of many will be one of the outcomes, with those best qualified the most likely to be “ar an mbád bán” or on a jet to Australia. Some I suppose may even take the train to Dublin.

  • Sergiogiorgio

    I like a lot of your ideas NMS. Too many people still think money grows on trees. The cherry on the cake would be if Labour get in next time round, then the merry-go-round would speed up until the gear box explodes – square, back to, and one.

  • Dan

    Practical improvement would see a governing coalition and an opposition in place, an end to the nationalist/IRA veto on such, an end to co-opting replacement politicians for those who have failed in their job or are stood down….and a cull of the quangos which bloat the public expenditure for zero return.

    For example, have a read of this bullshit.
    http://www.niccy.org/downloads/2014/Publications/Corporate_publications/NICCY_Final_Corporate_Plan_14-17_-_final.pdf

    Or this…
    http://www.nihrc.org/uploads/documents/nihrc-general/corporate-reports-plans/NIHRC%20Strategic%20Plan_2013-2016.pdf

    Close themdown. Employ a few more nurses instead

  • Guest

    Those are fun. I just asked two 14 year old grammar school girls if they’d heard of Niccy and they answered Nicki Minaj?!?

    After they’d stopped giggling they said they’ve heard of Niccy at school but can’t remember what she/it does.

  • chrisjones2

    Oh Lord …I have caught dyscalculia. I cannot see a single number in the NICCY plan

    They have all these outputs but nothing on that dirtty word – money

    How will they cope with say a 40% budget cut. All those seminars undelivered!!! All the unemployed stoops trooping down to Corporation Street

    Hang on. That cant happen. It would be a breach of equality / human rights / the GFA / St Andrews ……..

  • NMS

    Sergio, thank you. If you set priorities, then you can work towards them. In the case of UKNI, I cannot see that there is any set of clear priorities set out and agreed, other than a divvy up between the DUP and the Provos.

    If you look at the NISRA analysis of deprivation by area, you will find all those areas within say West and North Belfast, where there has been huge spending. Yet all this spending has not made any difference other than keeping the local “leaders” in regular cash and the lumpen elements in their control by their weekly handouts.

    Whiterock, New Lodge, Shankill, Ardoyne, Falls etc., they are all there.

    The whole dependency culture “meoin an deontais” ensures the mafia like control is retained.

    However removal of core services is not the way to deal with the financial problem. It is crucial that they are maintained. However in the UKNI mind warp, it is they which are more likely to suffer than projects close to the two larger factions.

    As an aside, I went out this afternoon to escape the dreary weather to a shopping centre, the Pavilions in Swords. I was very surprised at the number of UKNI car regs in the carpark. Clearly the UKNI middle classes in their shiny large cars have their eyes on the cheaper prices on offer, with the strength of sterling helping.

  • David Crookes

    Sorry to be an oul nyerp, boys, but MITIGATE means ‘soften’, and MILITATE means ‘fight’. You can’t ‘mitigate against’ anything.
    Full marks to Mr Agnew for painting on a broad canvas (all of us will have to pay more). Mr Allister strikes me as having a more particular focus (some of us are really bad).

  • Stan McGlone

    I agree with the educated leaving NI. I am doing the same myself once I complete my University education. I honestly feel there is no future here. It is a non stop cycle of sectarian hatred and petty politics. I am beyond sick of it all. I have only been looking at careers based in England some parts of Europe and of course the USA. My qualifications are based within the scientific side of life and in high demand in many countries.

  • Comrade Stalin

    Jim should use a bit of his legal genius to suggest some practical improvements to our governance

    Yeah, but then he wouldn’t win any votes.

  • Comrade Stalin

    Steven is right.

    The Executive have spent the past seven or so years behaving like a teenager with his first credit card. Any time a decision comes up, they stuck it on the tab. Suspending water charges ? On the tab. Regional rates freeze ? Also on the tab. Free prescriptions ? Free transport for the elderly ? Yup, stick that on the tab too. A5 ? Again, the tab. Air passenger duty offset costs ? Ditto. G8 ? Giro D’Italia ?..

    So we’re paying for all this new stuff, which costs more, at the same time closing down all the means of raising revenue. Rates increases are ruled out, as are water charges. The bill has come through and now must be paid ..

  • NMS

    Stan, in reality you reflect the issues much more effectively than I or others can. You have skills which are wanted, they are likely to be in demand locally by the likes of Almac.

    The focus of the DUP/Sinn Féin axis is on maintaining control over enough people to ensure they remain in power. The departure of the educated and more qualified helps them to continue. The poor remain, dependent on their handouts.

    I was going to suggest that there is plenty of work available this side of the Border, but with the way things are going, don’t bother. Plan your life somewhere more stable!

  • I made the same point in 2007 in my Assembly speech on the draft budget 2008/2011. The draft Budget was rather like an Easter egg — attractive on the outside, but with little substance and with a great hole in the middle.

    The draft Budget raises serious questions. It is based on unrealistic assumptions and party-political considerations and does little to tackle the real problems facing our economy

  • NMS

    Sergio, the Greens have consistently supported rational economic policies. Unlike other parties, their policies have always take into consideration long term effects, which is of course not very popular. The current dishonest use of the water issue in Ireland is a perfect example. They have always argued for payment by the user.

    In UKNI as Brian Wilson points out below, he raised major concerns seven years ago. However back in the time of Uncle Tony Blair, all such comments were swept under the nearest carpet or rug.

    The greatest worry is that the DUP/Sinn Féin axis will push through a set of adjustments, which focus on cutting necessary capital expenditure so as to ensure the least level of short-term pain for their particular interest groups. It will be pure clientelism at its worst.

  • Sergiogiorgio

    I don’t disagree with your point on DUP/SF, but the Greens can make these comments because they will never get into power. Their, the Greens, central tenet, is the environment, which is a subject built on dodgy science, and is not and never will be a country specific issue. It’s global, so good luck sorting that out. I view the Greens, economically speaking, in the same way that I view other socialist parties. I don’t want to pay more tax….period. And I’ll vote for that party which reduces my tax burden and is qualified to run the economy, ergo, the Censervatives, ergo, I don’t vote in NI elections. Sorry for the ramble.

  • Ross Brown

    We are still very much open minded to the idea of some reduction to the small business corporation tax – with small business reduction we have a far greater potential to grow the tax base and recoup reductions as domestic businesses expand. The same cant be said for a reduction in the headline rate which does not stand up to any serious economic scrutiny and is being driven by political ideology.