Northern Ireland Executive and the Global Economic Downturn

The global economy has changed radically in the last 12 months.

 

Irresponsible lending, poor regulation and the crash in the construction and property industry have led to an unprecedented level of financial instability.

 

Unemployment is rocketing as demand falls, businesses are closing and firms and families are coming under increasing pressure.

 

In Britain and Ireland rising jobless figures is reducing the tax intake and raising social security costs are putting more pressure on public finances.

 

There are a number of options open to the government in Northern Ireland.

 

Firstly, it can try to mitigate the worst impacts of the recession by reordering public expenditure to achieve maximum short-term stimulus to the local economy.

 

Secondly, it can use public spending and policy development to prepare Northern Ireland to take immediate advantage of the recovery phase as and when the global financial situation improves.

 

And finally, it must strive to bring relief to those who are suffering the most, namely households and businesses.

 

In terms of managing the budget, the Northern Ireland Executive has a relatively easy job to do compared to governments in London and Westminster.

 

It only has to manage public expenditure and does not have to grapple with tax policy or regulate banks.

 

However, the budget approved by the Executive although opposed by the SDLP was based on a number of projections and presumptions which have changed significantly and are no longer realistic.

 

Over the last 12 months the districts with the largest increase in employment anywhere in Britain and Northern Ireland have been in Magherafelt, Co Derry and Cookstown and Dungannon on Co Tyrone.

 

At a time when some streamlining of the public sector was intended the Department of Employment and Learning and the Department for Social Development have had to recruit 350 extra civil servants cope with the increased pressures on the jobs and benefits services.

 

Therefore, when economic conditions change, the budget management system should adapt too.

 

At a time when families are being forced to rethink their own budgets it is irresponsible for a government not to do likewise.

 

Despite SDLP protestations in the Assembly and around the Executive table there is no apparent willingness on the part of the government or the other parties to redraw budget spending priorities.

 

Their argument is that there is no new money, but this is precisely why there is a need to re-examine the budget.

 

The Assembly is meant to be the budget authority yet there is no longer a proper budget process in the Assembly.

 

Effectively, this means that the Assembly is not doing its annual job of probing how money is being spent, whether the priorities are right or examining budget performance.

 

The SDLP in its recently published policy document New Priorities in Difficult Times is proposing to fundamentally recast the Budget - which is what Devolution is meant to do and what the Assembly ought to be doing.

 

In total the SDLP believes it has identified additional resources of more than £400m which can be used to secure and create jobs.

 

Our new spending priorities include the creation of a recession recovery fund to help businesses get through the downturn and a £50m wage subsidy scheme based on the models in place in Wales and the Netherlands to protect jobs.

 

Furthermore, the SDLP would invest millions of pounds in retraining and upskilling programmes.

 

By bringing forward labour intensive capital investment projects and building more social houses we can create further jobs, boost the construction industry and help those families in greatest need.

 

And to fund our new priorities the SDLP believes there are a number of options open to the Executive in addition to the Assembly asserting its authority over the budget process.

 

In addition by tackling excessive bureaucracy within the Northern Ireland civil service, the Executive can make significant savings.

 

With 30,000 plus employees, the Northern Ireland Senior Civil Service is too large.

 

For example, in the Department of Finance and Personnel there is more than 40 staff at grade 5 or above. Grade 5 staff can earn up to £80,000 plus bonuses, and most have extensive office accommodation and personal secretaries.

 

Therefore it is proposed that there is no recruitment or promotion into Civil Service at Grade 5 or above.

 

Last year, the top few hundred civil servants received performance bonuses and every Permanent Secretary received a substantial bonus in addition to receiving a wage which is on average 22% more than their equivalents in the private sector.

 

The SDLP is not convinced that in the present economic climate, a system of largely automatic bonuses for already well remunerated senior civil servants is best use of public finances.

 

The SDLP also proposes that there is a moratorium for the next two years on civil service recruitment outside those areas that are providing demand-led services directly to the public.

 

Other proposals include optimizing our best revenue making assets, redirecting existing expenditure by borrowing from cash reserves of public bodies and promoting innovative ideas to raise additional funds.

 

The SDLP proposals are by no means exhaustive, and we not claim to provide all the answers to the current economic crisis.

 

However, the SDLP is putting forward these ideas with the intention of starting a proper debate and securing agreement on where the money could be reallocated.

 

Collectively they underpin a very substantial shift of Executive resources to the frontline in the battle against the impacts of the economic downturn.

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