Towards a budget
Peter Cheney assesses the DUP’s financial plans and the room for agreement with Sinn Féin.
While Sinn Féin pre-empted the spending review in ‘There is a better way’, the DUP’s ‘Rising to the challenge’ alludes to the figures that are now known.
The broad thrust is to “deliver the most effective and efficient administration” which protects front-line services. The party claims that its proposals would balance the budget “without the community feeling any appreciable level of pain.” The forthcoming budget “will not just be about cuts but about doing things differently to build a better Northern Ireland.”
Changes to current expenditure take up most room. Raising the regional rate would “only make a marginal impact” and increases should be linked to inflation in each year to 2014-2015 inclusive. Capping domestic rates would halt “substantial” district rates rises, with requests to break the cap going to the Environment Minister for approval.
Pay and jobs
Turning to employment, the party sees “no evidence that the private sector is yet in a position to engage any significant number of public sector employees.”
As well as the proposed two-year Civil Service pay freeze, for those earning £21,000 or over, new legislation would also end one-step pay progression. DFP estimates that the freeze would affect just over half of the Civil Service. No performance bonuses would be permitted except where stated in a contract.
NIPSA spokesman Kieran Bannon claims that Civil Service pay has gone up by 9.2 per cent over the last eight years, compared to 20.5 per cent inflation.
Ministers would voluntary give up 5-10 per cent of their salaries. The basic ministerial salary is £76,400, rising to £106,600 for the First and Deputy First Ministers and falling to £60,000 for junior
ministers. UK Government ministers took a5percentpaycutinMay.
Some bad news is in store for consultants, with a call for departments to be “much slower” to call on them. Consultancy costs should go down by 25 per cent over four years.
With Civil Service recruitment frozen, new staff would only be recruited in “exceptional circumstances” and overall numbers would drop by 4,000 over four years through “natural wastage”. The Civil Service employs around 12 per cent of the public sector employees.
Structures
Every arm’s length body should have a short-term review. Each one would therefore face the possibility of abolition or a merger. This approach mirrors the Cabinet Office’s review, which resulted in 192 quangos being abolished and 118 being merged.
The suggested cut in the number of MLAs – down to 75 or 72 – would take effect from the next poll, scheduled for 2015. Based on the current salary (£43,100), this would save around £1.5 million plus expenses. Press attention usually focuses on political salaries but over 3,430 public sector staff earn £50,000 to £100,000, and 967 earn over £100,000.
More immediately, Peter Robinson wants to see the 12 government departments cut to eight after the May 2011 election. Any change would need cross-party agreement but his proposed departments are as follows:
• Executive Office – cross- government responsibilities;
• Agriculture, Environment and Rural Development;
• Communities and Social Welfare – local government, housing, rates, benefits;
• Economy and Business – includes skills, sport, culture;
• Education – includes higher education;
• Health and Social Services;
• Justice;
• Regional Development – roads, water, transport, planning.
The DUP claims that duplication costs £25 million per year and a further 1 per cent saving would free up £100 million per year.
Lower corporation tax is re-affirmed, as long as this does not place an “unacceptable burden” on the Executive budget. No reduction is expected before 2013-2014 and the party wants any expected higher tax to be re-invested locally.
Assisting the voluntary and community sector is an extension of the DUP’s support for faith-based work. It also ties in with Cameron’s Big Society, as agendaNi reported last month, and the sector’s new role would be outlined in a “meaningful and constructive concordat”.
Efficient procurement is also promoted, with the Civil Service opening up opportunities for smaller firms “rather than bundling jobs and services or retaining a major contractor or supplier.”
Health trusts and the Housing Executive are urged to follow the same principle.
One new public body, an “efficient” British-Irish Council Secretariat, is proposed to balance east-west and North/South co-operation. Video- conferencing and ad hoc contacts would be cheaper than high-level meetings. “This is not a political point,” it emphasises, adding an “unwavering” commitment to good relations with other governments.
The DUP wants to see annual efficiency savings maintained at 2-3 per cent per year, with the saved money funding programmes “to help the Executive deliver on its latest priorities.”
A targeted investment, it claims, could create over 7,000 new jobs (see table). In a move away from the high-value jobs target, almost 2,000 of these would be in call centres.
Capital
Switching £100 million per year from current spending would boost capital funds in 2011-2012 and 2012-2013. A negotiated dividend from the Port of Belfast could also yield funds. Surplus assets should be sold but not until the latter years, when prices recover. Over £100 million could be generated and much more could potentially be raised through alternative models in housing.
Public-private partnerships are again encouraged with joint ventures highlighted for consideration. Selling and leasing back public sector assets is also seen as having potential, allowing the Executive to invest in new assets.
This marks a step forward in the fiscal debate as MLAs prepare to implement the inevitable cuts and redesign government in the process. Its publication was welcomed in Stormont circles, with Alliance seeing it as an end to populism. TUV spokesman David Vance went further and demanded an end to cross- border bodies; these cost £122.5 million in 2009 according to the North/South Ministerial Council’s accounts.
The overall DUP approach, that efficiency savings must come before tax increases, is a reversal of Sinn Féin’s but there is certainly common ground.
Both parties generally back a quango review, fewer bonuses, less consultancy and pay freezes (although Sinn Féin’s bracket starts at £37,400). Other parties will have their say but with the DUP and Sinn Féin holding 11 out of 14 ministerial posts, areas of agreement between them will carry the most weight.
