Transfixed by their obsessions without progress, they ignore the real politics of the future …

Following on from Peter Donaghy’s  really interesting corrective post comparing ROI/NI household income, what about the Budget then?  How did it go down with you over the tray bake or down the pub? Yes, I’ll bet you were riveted. The frustration in veteran economic commentator John Simpson’s measured prose is clear enough.  The British government know they can spin the budget without facing direct challenge.  Punch drunk civil society reacts wearily, having made similar points for years to little avail and pulling  their punches as usual.

The local parties, stuck in out of date obsessions and failing to meet their responsibilities seem to believe it’s enough to reply with their usual soundbites.  The few articles like John’s are barely debated apart from a little elementary point scoring. The media, taking their lead from politics, fence off economics as a dry and largely incomprehensible subject except when it’s about yelps of complaint.

Not that it was any better when the Executive was in office. John points out in economist’s language that the Executive ducked setting logical priorities. In making spending choices at a time of “fiscal consolidation” (i.e. no more real money),  there is always a relative loser who may be compensated elsewhere, or later, or sometimes even not at all.  Spin and  burying  the real stuff in the red book of detail is a normal part of presentation in a grown-up system. But at least there are priorities and the truth will out later .

in the Executive, each leading party feared the unintended consequences of past the parcel politics when they would have no control over  which of them might end up  holding the booby prize. So they did a little dealing but mainly just froze.

The UK government with Dublin breathing down their necks for greater but unspecified influence under direct rule, slavishly reproduce the inadequacies of the Executive.  We are faced by government for elites and by elites at either national or regional level and with little prospect of anything better. ”

 Extracts

Since devolution, ministers of finance have presented what can best be described as a minimal statement of spending with little emphasis on the sources of the revenue expected. Also, only minimal aggregate spending allocations are identified. Then, in a complication, spending classified as ‘annual managed expenditure’ is usually set out in supplementary detail.

Readers will look in vain for a reconciliation, in simple form, of revenue, expenditure, capital spending and (sources of) borrowing. They will also look in vain for a tabulation of information for recent years, say the last five, to see the overall trends. Readers will also need to be careful to examine whether the published information is expressed in ‘current prices, not corrected for inflation’ or in ‘real terms, corrected for inflation’.

One key conclusion is critical: in the last two years the NI budget for devolved current and capital spending has been held, by the Treasury, at nearly the same total, year by year, when measured in current prices. In other words, the budget has been decreasing in real terms.

One key conclusion is critical: in the last two years the NI budget for devolved current and capital spending has been held, by the Treasury, at nearly the same total, year by year, when measured in current prices. In other words, the budget has been decreasing in real terms. Even allowing for the one-off £410m special support from the DUP agreement with the Conservatives, in 2018-19, the current spending in the NI budget in real terms will decrease by about £150m assuming a pricing effect of 2.5%.

The budget, as presented, comes close to assuming that public services will continue in 2018-19 on the same basis as 2016-17 and 2017-18. The only adjustment was for an increase in the regional rate where the increase just about kept pace with inflation. Local rates bills are still well below those in Great Britain.

Spending allocations favoured health (with an extra £270m, 5.5%) and education. The terse language of the budget statement falls well short of an explanation of the impact of what will be real cuts for seven of the nine departments. The Secretary of State needed to present this budget but couldn’t she have made it more acceptable?

Real  granular  policy making should  begin over what the government calls ” the new Industrial Strategy, discussed here by Paul Mac Flynn of the Nevin Institute.  

The debate that we should be having is about how we grow revenue, not how we reduce spending. And when we talk about growing revenue, that does not mean raising tax rates, we’re paying our fair share of tax already. It means growing the value of our output and consequently boosting the total amount of tax we pay. This is where the industrial strategy comes in.

A new industrial strategy that challenges the failures of the past and sets a new course toward greater productivity is needed now more than ever.

The real tragedy would be if Northern Ireland slides back into direct rule, public spending is slowly and painfully contracted year after year and nothing else changes. It shows how much Northern Ireland needs its own government to challenge this kind of fatalistic groupthink and seek a mandate for ambition.