David Dobbin: change of mindset
David Dobbin gives his perspective on the future prospects of Northern Ireland’s public and private sectors.
The Executive are in the process of finalising their draft Budget. In doing so, they face two main challenges: how to grow our private sector and how to become more efficient in our public sector.
Put in its simplest way, achieving private sector growth requires us to increase our external sales of goods and services and to get more people to visit us, spending more of their money while here. We also need to attract foreign direct investment which will bring in much needed new skills, technologies and business opportunities.
During the current recession Northern Ireland has gone from one of best performing UK regions to one of the worst with rising unemployment and lack of economic growth. In such circumstances, priority must be given to encouraging new investment which will lead to quality sustainable jobs, increased exports and greater visitor numbers. However in the current draft Budget, the proposed reductions in Invest NI’s budget for attracting new business investment would mean that “some good projects” in the pipeline are unlikely to be supported.
To find the money needed for economic development, the Executive must generate savings elsewhere by eliminating waste and improving public sector productivity. The debate needs to move from where or where not to make the cuts, to where the real waste is.
We need to tackle the significant duplication which exists in our public sector. We have over 50,000 spare school places, too many acute hospitals, too many prison officers, too many councils and government departments, and too many layers of management and supervision.
Tackling these issues, although difficult and time-consuming, will release millions for redeployment elsewhere to fund priority areas such as economic development, infrastructure, education and healthcare.
If politics is about how society distributes its wealth and sets its spending priorities, business is about creating wealth and jobs, about efficiently producing goods and services which meet their customers’ needs. Our private sector is too small, made worse by the fact that we still have activities such as ports, water, vehicle testing etc. under public control when they could be more efficiently delivered in the private sector.
It is not a case of whether the private or public sectors are good or bad; it is case of playing to their strengths. Our politicians and government departments are simply not experienced or agile enough, compared to efficiently run businesses.
Worse still, keeping a capital-intensive utility such as water in the public sector reduces the money available for both investment in water and infrastructure spend elsewhere. Under Treasury rules, while water is under full public control with no domestic charging, the significant investment needed in the water and sewage will be treated as part of the Executive’s overall expenditure limit.
The thorny issue of water charging needs grasped. Not only are businesses including farmers already paying for water, so are domestic consumers who an independent review panel estimated are already paying £109 million of water charges within the domestic rate. Why can’t this be separated out and charged separately and the rates reduced accordingly? Introducing full domestic water charging will generate over a billion pounds worth of much needed additional infrastructure investment over the next decade.
Water, ports and other activities can still remain under public ownership using a mutual model as per Welsh Water but behave as private sector operations thus optimising their efficiency. Regulators can be given powers to ensure these mutual companies must achieve high standards of customer service and cost efficiency.
2011 is an election year and the new incoming Executive will have the opportunity with a fresh mandate to pursue the actions necessary to transform our public sector and revitalise our private sector. In today’s cash-deficient society, we need to eliminate waste and duplication and ensure public money is spent where it will generate the greatest public benefit.
Dr David Dobbin CBE is Group Chief Executive of Dale Farm, Chairman of the Strategic Investment Board and a Director of Invest NI.
