Saturday, 24 April 2010

Cameron trips on Paxman

Comments from David Cameron on last night's Newsnight with Jeremy Paxman seem to have caused something of an Ulster (and North-Eastern England) stir.

The Guardian has gone with "David Cameron targets north east and Northern Ireland for spending cuts". The SDLP's McDevitt has pounced on the cuts message while even 3000 versts is emphasising the need for clarification. Iain Dale is denying there is a problem and alledging leftist bias.

This highlights a key weakness in the UCUNF economic message because while one feature of Tory plans are clear - cuts - its policy on the corporation tax aren't. As David Gordon points out in
his review of the corporation tax issue all that is offered in the Tory manifesto is:

"...David Cameron's Conservatives committed themselves to a review."

So the first queston mark is will it happen at all? At the moment this isn't a bird in the hand for two in the bush offer rather a bird in the hand for the possibilty, that at some stage. maybe, subject to EU approval, that there could be two in the bush.

It also shows the weakness of the UCUNF relationship. It claims to have been working on the idea for a couple of years so why is it still effectively on the drawing board and not a clear commitment?

This review will apparently look at the option of devolving the corporation tax to Northern Ireland. However, if devolved, to meet present EU law any cut would have to be matched by a reduction in the block grant. Aside from reinforcing the Tory cut narrative, if the block grant is being reduced year on year how feasible is it for Stormont to find the tens if not hundreds of millions to pay for using such powers?

The recent report by the Economic Reform Group argued that:

"In any event, the difficulties in making a one-off reduction in the baseline should not be overstated."

They highlighted past under-spends as a solution. However they did concede that under devolution the level of under-spends has dropped significantly but they did not include the future environment of public spending levels, how possible is it in an environment of other cuts?

So the second question mark is would it be financial possible for a constrained Stormont to act on its devolved powers?

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