News analysis Hard choices ahead for Northern Ireland

8 Nov 07
The timing could hardly have been worse. Job creation is the Northern Ireland Executive's top priority, Finance Minister Peter Robinson announced in his Budget.

09 November 2007

The timing could hardly have been worse. Job creation is the Northern Ireland Executive's top priority, Finance Minister Peter Robinson announced in his Budget.

Just four days later, one of the province's largest employers, Seagate, announced it was slashing 930 jobs with the closure of one of its factories. It is a metaphor for the challenges that lie ahead for ministers.

'The Troubles' – that elegant euphemism for the civil war that took hold of Northern Ireland for 30 years and cost more than 3,500 lives – left enduring scars on society.

Much of the infrastructure, such as roads and buildings, is outdated. Sectarian division has added to the cost of providing public services. People who fought each other did not want to bump into 'enemies' in shared swimming baths, or have their children educated together.

Peaceful coexistence involves overcoming such barriers. This is recognised across the parties and is not just a philosophical preference, but a financial necessity.

The Democratic Unionist Party occupies the key jobs of first minister, through Ian Paisley, as well as finance minister, so is acutely aware of the need to make service provision cheaper.

Duplication of facilities is a key factor in the cost of the public sector being much higher in Northern Ireland than in the rest of the UK – public spending per head of population is nearly 30% higher than in the UK as a whole, and over 10% more than in Scotland.

Nor are many public service outcomes adequate. Almost a quarter of school leavers have no qualifications, against 15% across the UK. While the official unemployment rate is 3.6%, the lowest in the UK, a more realistic measure is the rate of economic inactivity among adults – the worst in the country, at 27.8% against 21.3% for the rest of the UK.

So it is perhaps inevitable that Peter Robinson's Budget, the first since the restitution of devolution, focused on two themes – improving Northern Ireland's economy and bringing down the cost of public services.

The biggest increased allocation was to the Department of Enterprise, Trade and Investment, given a 7.3% cash boost for 2008/09, taking its budget to £200m. In return, its minister, the DUP's Nigel Dodds, has been set a challenging range of targets.

The employment rate is to rise by 5%, an extra half a million tourists are to visit each year and the private sector productivity gap with the rest of the UK (excluding Southeast England) is to be halved. Some 6,500 jobs are to be created through inward investment.

But Northern Ireland's difficulties do not end with jobs. Its health service is weaker than in the rest of the UK: the health minister, the Ulster Unionists' Michael McGimpsey, has claimed it needs £350m extra annually to cope with demand. A funding rise of 3.5% for health next year, taking it to £3.9bn, is above inflation, but below what the minister called for and less than the increase in England.

Education is another problem area, with an even tighter settlement at 3% for next year, though with more promised for 2009/10 (a 5.6% increase) and 2010/11 (a further 4.4%). This could be worth more than it seems – a programme of school rationalisation is now under way that is reducing the number of surplus places, increasing integration within schools and could cut costs dramatically.

The need for educational integration has become a matter of political consensus. In a little noticed but highly significant public comment last month in Dublin, Ian Paisley spoke approvingly of children mixing across religions. He explained: 'I believe we should have one school system. If people don't like that, let them have their own schools and let them pay for that.'

Paisley's comments also signal the extent to which the DUP and Sinn Fein have reached mutual accommodations in government. The Budget generally favoured departments led by the DUP and Sinn Fein.

The Department for Regional Development, whose minister, Conor Murphy, is tipped as a future Sinn Fein leader, did especially well. It has a 3.5% increase for next year's revenue budget, followed by 7.5% and 8.4% in the following years, with a 52% increase to £568m in next year's capital budget.

There is to be a major road improvement programme, additional spending on trains and buses and a rapid transit scheme in Belfast.

The DRD's funds are also the key to unlocking £646m on water and sewerage capital projects, required to meet European Union discharge standards. But what the Budget did not resolve – and could not to everyone's satisfaction – was how to pay for water and sewerage. All the parties fought the Assembly elections on the promise of abolishing water charges. It has now been agreed that water charging will be phased in as an additional levy alongside the district and regional rates.

But as a sop to angry voters, Peter Robinson froze the regional domestic rate for three years.

But there are losers as well as winners from the Budget. The Department for Employment and Learning – whose minister is Ulster Unionist leader Sir Reg Empey – was given a mere 0.4% increase, despite it being responsible for raising the adult skills levels that should form the basis for greater employability.

And the Department for Social Development was given just 1.6% extra, although it oversees social integration, regeneration and affordable housing. DSD minister, the Social Democratic and Labour Party's Margaret Ritchie, said the settlement 'will present me with significant challenges in improving the provision of social and affordable housing and delivering social security benefits'.

Ritchie added: 'My department received one of the smallest increases in the draft Budget and I will now have to work very hard along with my officials, to manage within the resources which will be available to us… It was difficult for me to sign up to a document which did not match my aspirations and ambitions to increasing the number of social houses.'

The impression left is that while the two main parties work better together than expected, the SDLP and the Ulster Unionists have become marginalised. In recent weeks, both SDLP leader Mark Durkan and Sir Reg Empey have hinted of taking up roles in opposition to the Executive.

Yet the real opposition could come from the trade unions. In order to cut the cost of delivering public services, Peter Robinson is launching the Performance and Efficiency Delivery Unit, whose role is to review the public sector and cut costs.

It will look specifically at reducing the high levels of absenteeism, increasing productivity and making greater use of the private sector. Robinson promised to cut administration costs by 5%; that overstaffing and 'poor working practices' would go; and that he would not tolerate 'resistance to radical change'.

The main public sector union, Nipsa, responded vigorously. General secretary John Corey said: 'Nipsa will not stand by and allow arbitrary unjustified public service staffing cuts without any regard to workloads and public service demands to go unchallenged.'

The union has already demonstrated its resolve and willingness to take strike action in an unrelated dispute involving classroom assistants and no one doubts its willingness to fight.

These remain testing times for the Executive and public sector workers.


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