Friday, 25 June 2010

Pain, Pain and More Pain

The emergency budget is in. In terms of Northern Ireland there is very limited additional detail other than the Con Dem Budget is proposing to go signifcantly further than Labour proposals did. The Labour proposals were unprecedented in post-war British politics and the emergency budget proposals increase the pain further, for example DEL budgets will be cut 25% than Labour proposed.

The Comprehensive Spending Review to be revealed in late October and it will provide the real detail. This detail will be very gruesome. Under Labour's proposals NI would have most likely received no increase in cash terms with wage and inflationary pressures meaning cuts in real terms. However, it is hard to see how the Con Dem proposals will not result in actual cash cuts to the local budget (plus the AME consequentials of the welfare changes).

People have been making references to the early 1980's as the comparison. However, what is being proposed goes further and longer than the contraction that occurred then. Furthermore, while it was tough, Northern Ireland was actually spared the full dose of Thatcherism.

On building the private sector, there will be a paper on rebalancing the Northern Ireland economy although if it is based on previous Tory proposals it could be a wasted process. Finding the funds locally to pay for cuts in corporation tax while trying to manage an unprecedented budget consolidation borders becomes fanatsy politics. The differential reliance on public sector spending means differential results could be the outcome of the budget. Namely, a recovery of the national economy but regional stagnation - this is were it could be a repeat of the 1980's.

In terms of social justice the Institue for Fiscal Studies (pdf file) has given its verdict and it has placed significant question marks on the government claims that the budget is not regressive i.e. the burden falling disproportionately on the poorer. However, the desire for greater transparency and accountability on budgets seemed not to stretch to the IFS for Douglas Carswell at least.

The Economist stresses the importance of the actual numbers involved:

"Daunting as they sound, it is easy to miss the meaning in these “large numbers”... But its import is seismic."

Large numbers can become difficult for the man or woman in the street to comprehend when announced so it has still not sunk into people the scale of what is coming down the pipe - pain today, pain tomorrow and pain the day after.

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