Cut Jobs, Increase Rates and Bring in Water Charges Suggests Treasury Review

The crisis in Northern Ireland’s public service seems to regularly top the local news here in one form or another, usually when one of those services experiences a failure that brings them into the media glare for a time. One of the primary drivers of the crisis is the lack of funding provided by Stormont (a recent slugger post covered that Stormont’s tax intake is the lowest in the developed world).

However, a Treasury review conducted after the Executive overspent its budget by £400 million last year suggests that if Stormont took certain steps, it could raise up to £3 billion in revenue.

As this BBC news report by John Campbell puts it, the report

‘…suggests that if the civil service was cut back to the equivalent size of the service in England it would save almost £400m a year…It also suggests that ending the current policy of “pay parity” could save as much as £2.5bn a year.’

Campbell helpfully explains that pay parity is ‘the principle that public sector workers in Northern Ireland, such as teachers and nurses, should get broadly equivalent pay to those in other parts of the UK.’

The report also goes on to recommend certain revenue-raising measures

It suggests that raising domestic rates, a property tax on houses, to match the level of council tax in England would raise more than £400m a year. That would see the typical rates bill rise from around £1,200 to almost £1,800. It suggests that on top of that introducing water charges of around £465 per household would bring in a further £357m.

So, to summarise, cut public sector jobs, slash wages, increase taxes. Political reaction from local parties has been negative with Deputy First Minister Emma Little-Pengelly being quoted in the Belfast Telegraph as saying that

Some of the findings of a Treasury review into Stormont finances are “absolutely preposterous”, deputy First Minister Emma Little-Pengelly has said…Ms Little-Pengelly said: “I think some of what is in there doesn’t stand up to even the most basic of scrutiny…Who is suggesting that we are going to raise over £3bn in one year from a population of approximately 1.9 million?…The burden of that on hard-pressed families in Northern Ireland would be extraordinary.”

“I think there is no need to go into some of that detail because I don’t think many of the references within this report stand up to any scrutiny whatsoever and I am saying that as somebody who is naturally someone with a high level of fiscal responsibility when it comes to these matters.”

First Minsiter Michelle O’Neill has also added her criticisms in a later BBC report by Enda McClafferty…

O’Neill said the findings were “lazy” and lacked any proper scrutiny.She said the focus should remain on the underfunding of Northern Ireland compared to other parts of the UK. She suggested that if Northern Ireland had the same funding model as Wales and Scotland it would receive an extra £1.1bn and £3bn respectively to spend on public services.

In the same report, Secretary of State Hilary Benn defended Northern Ireland’s current level of funding as he claimed that the government was…

funding Northern Ireland above its level of need”. “The level of need has been independently assessed, so for every pound spent in England, in Northern Ireland there is £1.24,” the secretary of state explained. “Secondly we gave the Northern Ireland Executive a record settlement over three years last summer. “Since then we’ve provided an extra £370m in the budget, an extra £228m in the Spring Statement which was last month.” Benn added that in return it was “entirely reasonable” for the government to ask local ministers how they planned to make Stormont’s finances sustainable.

Enda concludes his report by asking us to ‘expect the claims and counter claims to continue as both sides are engaged in a high stakes battle over finances’.

Slugger Team

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