Fever

It appears the election fever has gone to the TUV economics spokesperson head.  David Vance is now deeply disturbed about the potential cuts to the public sector and accusing others of U-turns over the issue of Corporation tax. With furrowed brow he states:

"Four years of such annual corporate cuts would mean more than a billion pounds being removed from the block grant by a delighted Treasury."

His worries for the public sector are something of a revelation. He displayed no such concern about the public sector before he chose to run as a candidate.  He previously stated (scroll down to comments):

" I would happily reduce the public sector – shred it."

Vance even feigns concern for public sector workers stating that:

"Having to sack teachers and nurses in order to boost business profits is an intolerable asking price"

He was not so concerned about public workers when he declared on his blog:

"Let's put the public sector parasites under the microscope - either let them perform or be sacked. Better still, privatise them all anyway!"

On when he dismissed teachers and nurses as part of a parasite sector that:

"These are the people who take the most sick leave, who enjoy the most generous holiday provision, who are guaranteed indulgent pension provision, but yet they need more. If they can’t afford to buy houses in 7/10 UK towns, then I’m surprised any houses at all are sold to their less well off private sector counterparts. This is pure spin, more moaning from the State workers — give us MORE!" 

Where were nurses in his thoughts when he made the demand to:

"Axe our NHS!"

As to U-turns he's doing one of his own, on Corporation tax he used to be a cheerleader for it:

"(I favour a 10% rate myself, let’s CHALLENGE the Republic and watch the corporate exodus Northwards!)...With my commercial head on I can fully understand and support the push for low corporation tax. I can see all kinds of benefits for all of the peopl of NI."

Although his flip flop on this is not surprising when his boss Jim Allister has done the same.

Vance once stated his belief that:

"I happen to believe that being in politics tends to lead to corruption - it's one reason I am glad I'm not on the front-line."

It appears that his attempts to enter the front-line has led to a corruption of his beliefs.

Comparisons

Nolan this morning is building its attack on Treasury figures (pdf file).  However, the figures don't provide the backing that is claimed. Table 9.16 shows the difference in spending is minimal.  With 100 in 2009-2010 the baseline spending was:

England   99

Scotland 108

Wales     102

NI              98

Nolan is also ignoring the significant regional variation within England:

North East         109

North West        107

Y'shire & Hum     98

East Mids            91

West Mids           99

East                   112

South East          92

South West         94 

Table 9.15 sets out per head expenditure, in 2009-2010 the English average was £1,896 while Northern Ireland it was at £1,881.  In terms of at regional level, the following English regions spent the same or less:

Y'shire & Hum £1882

East Midlands £1744

East £1711

South East £1759

South West £1807

What this all means is that to present the situation as plenty in England and famine in Northern Ireland is a misrepresentation.

Nolan is also following McGimpsey's failure to finish the sentence even when he talks about "priorities". The same Treasury figures point to the answer Nolan and McGimpsey don't want to discuss. The following would face savage cuts to bring NI in line with England:

1. Housing and community amenities

2. General Public services

3. Recreation, culture and religion

4. Economic affairs

5. Public order and safety 

The following would face significant cuts

6. Social Protection

The following would face cuts:

7. Education

Enough

According to the Health Minister there was enough money sent over by the Treasury to give him the money he wants.  

1.  There are at least 4 billion reasons why that is incorrect.

2. The Department of Health, Social Services and Public Safety in Northern Ireland has different responsibilities to the Department of Health in England.  The clues are in the names.  Thus their budgets are not directly comparable. The same degree of protection given to health budget lines in England and Wales has been given here but not ever budget line under the DHSSPS fits the English and Welsh model.  According to the David Cameron this protection has safeguarded health but here McGimpsey predicts calamity.  How can the same policy have such radically different outcomes? 

3.  Today the DHSPSS was criticised in an independent report (pdf file) for withholding public information about its budget. If the financial case is so clear cut, why is McGimpsey hiding it? 

Plan

A while ago IJP highlighted the contradiction in a Tom Elliott statement over the Tory link - with him managing to make it as look as clear as the Alliance Party/Liberal Democrat relationship ;-).  Now the issue of contradictions has risen again (but to be fair its spread over two statements rather than contained in one).  Yesterday the UUP made a move on the budget declaring:

"...the Ulster Unionist Party is unable to endorse the draft Budget proposal"

This prompted Three Thousand Versts and Open Unionism to ask what was planned next and was interpreted as a rejection.  Judging by the statement issued by Tom Elliott there was no plan with the position diluted to:

"At this stage we believe it is prudent to reserve our position. We are not rejecting the budget."

With Ulster Unionist Minister Danny Kennedy seemingly in the dark about the shift, did McNarry go on another of his solo runs as he has appeared to do with a finance paper which rejected policing and justice for  years and then his cuts document?  This would be hard enough for any communications unit to deal with never mind the hollowed out vessel that is trying to deal with it all.

Wilful

Yesterday I asked the question would the UUP continue with multiple positions on budgetary issues.  According to a Mallie tweet (or twitlonger to be accurate) the UUP has indeed opted to do just that with Danny Kennedy saying no decision had been taken to oppose it while a UUP document said a decision to oppose had been.

Channel

It appears that the policy significance of the North Channel cannot be over-estimated.  During Prime Minister's questions last week David Cameron said the ring-fencing of the health budget was enabling the Coalition government to improve health services:

"Today we are announcing a new cancer plan that aims to save another 5,000 lives every year by the end of the current Parliament. This is all about the early diagnosis that we need in the NHS, but I must tell the hon. Gentleman that we would not be able to do it if we had not, as a coalition Government, made the right decision to protect NHS spending-a decision completely opposed by the Labour party."

The equivalent policy of protecting the health budget lines has been instituted in Northern Ireland yet according to the Health minister here this will cause significant deterioration of the Health Service (and accepted by some of the media even when McGimpsey persists in the clear misrepresentation of the DHSSPS budget being the same as the DoH budget).  How can the same policy have such radically different outcomes?

There is also the broader question of who is setting the policy tune for the UUP on this.  The hundreds of millions more McGimpsey wants has to come from somewhere - more taxes, cuts elsewhere (tuition fees for example) or is it happy to continue with its multiple approaches of the past few months?

Botched

Part of the means of achieving savings in the NI budget is a review of the operation and existence of arms length bodies in Northern Ireland.  A review of how this will be achieved is to be pursued but this has led to criticism from some that cuts should happen at once.  However, the Coalition government's plans provide a relevant lesson for those who demand immediacy:

"Bernard Jenkin, the Conservative chairman of the committee, told the Guardian: "The whole process was rushed and poorly handled and should have been thought through a lot more. This was a fantastic opportunity to help build the big society and save money at the same time, but it has been botched.  I suspect that in the short term the reorganisation will now cost more than it will save. This was put together on the hoof and can be much improved for future reviews."

Contagion

It appears that the UUP's confusion over health spending has now infected its water charges policy.  UUP Deputy leader, John McCallister, on the Nolan show backed the introduction of water charges as a means to boost health spending.  He highlighted a UUP 2007 manifesto pledge for a £100 water charge (if Direct Rule had implemented water charges by the time devolution was restored):

"• Capping the Direct Rule Administration’s introduction of water charges at a maximum of £100 – prohibiting any rises while the Assembly and Executive devise a fairer, more sustainable alternative."

Leaving aside the manifesto pledge being conditional on them already being introduced and presented as a temporary measure, the recent policy paper of the UUP was more circumspect on the issue:

the Ulster Unionist Partyrecognises the serious financial difficulties families are facing across Northern Ireland and recognisethat households are on average paying £160 per year servicing water charges through their rates. Wetherefore call upon the Minister for Regional Development to lay out the facts and options open to theNorthern Ireland Executive with regards to water charges – focusing on the potential increase in costto the average household in Northern Ireland if they were to be introduced. The Ulster Unionist Partyfirmly believes that an informed and time-bound debate must take place and that if water charges are

the Ulster Unionist Partyrecognises the serious financial difficulties families are facing across Northern Ireland and recognisethat households are on average paying £160 per year servicing water charges through their rates. Wetherefore call upon the Minister for Regional Development to lay out the facts and options open to theNorthern Ireland Executive with regards to water charges – focusing on the potential increase in costto the average household in Northern Ireland if they were to be introduced. The Ulster Unionist Partyfirmly believes that an informed and time-bound debate must take place and that if water charges are

"...the Ulster Unionist Party recognises the serious financial difficulties families are facing across Northern Ireland and recognise that households are on average paying £160 per year servicing water charges through their rates. We therefore call upon the Minister for Regional Development to lay out the facts and options open to the Northern Ireland Executive with regards to water charges – focusing on the potential increase in cost to the average household in Northern Ireland if they were to be introduced. The Ulster Unionist Party firmly believes that an informed and time-bound debate must take place and that if water charges are to be introduced the most vulnerable in society must be protected, any charges must be phased in over a period of years and all revenue must be hypothecated to frontline health and education services."

Meanwhile John McCallister's comments led to UUP Councillor Ronnie Crawford to call for  his Deputy Leader to be:

"sacked or hanged"

Other

While the draft budget will grab the headlines locally, Labour tried to block the tuition fees hike in the Lords last night.  They failed with at least two Unionist Northern Ireland Lords backing the Coalition proposals, Lord Trimble and Lord Maginnis.  Trimble is a full blown member of the Conservatives so his vote is not that much of a surprise but why did Maginnis join him? Is it the first outworkings of Tom Elliott's latest deal with the Tories?

Pie

With Trimblesque skill McNarry's prediction that a draft budget was pie in sky has been disproved within 48 hours with it now on the table for people to inspect.  Beyond providing a lesson in the dangers of political predictions the big politics of this should be recognised, the Executive has passed another major test. 

The obvious test at the start of this term was the devolution of Policing and Justice and this was achieved.  Circumstances then created budget issues for it to handle.  The NI Executive was the only devolved administration to implement the emergency budget cuts in this budget year (which helped created some breathing space in the next financial year).  

The Comprehensive Spending Review gave it a much bigger task.  The easy option would have been to cut a one year deal and a number of commentators predicted just that.  It didn't.  It went for the four year package.  While this draft budget will invariably involve pain when it is finalised it will mitigate it to some degree by providing people will have a degree of certainty of how much pain, when it will come and for how long.

The consultation process on the draft is a test for our broader civic society to see if they can behave as responsibly and where the seek changes to cuts that they provide credible alternatives of where else they should fall.

Today it should be acknowledged that Stormont and how it operates may not always be quick or pretty but it is functioning.

Back pocket

It appears that asset sales have not been included in the Treasury's projections for public finances.  How much these will be is hard to predict (particularly as the sale of bank shares will play a part in it) but the Treasury Committee Chairman expects the revenues to be substantial: 

"My best guess is that you’re going to find yourself not wanting to hypothecate it, in which case you’re going to have quite a bit in your back pocket as the years go by."

What is to be done with these extra revenues?  Apparently not just deficit reduction:

"Proceeds would go to a number of purposes, Osborne said, such as capitalising the government’s planned Green Investment Bank...I’m not wedded to all proceeds from asset sales or privatisation going into deficit reduction...Just because I’m open to discussion does not mean it’s open season. "

Although it may have to be used as contingency if the reliance on welfare cuts to deliver spending reductions proves as illusive as it has in the past.

Authoritarian

There will be an event or image that brings out the authoritarian in each of us and I must admit that this one manages it for me. 

It brought to mind the PJ O'Rourke chapter on the issue of anti-flag burning laws.  When such laws were rightly ruled unconstitutional he found the response of one state amusing.  It passed a law stating anyone assaulting someone burning a flag would be subject to a small fine - the legislative equivalent of a 'kick me' sign.

No doubt my anger will subside but the stupidity of the yesterday's behaviour  will only grow.

Fewer

The OBR has reviewed its projections for the economy.  In the area of public sector jobs they have reviewed  public job losses down from 490,000 to 330,000.  This is based on the CSR decision to make a higher proportion of the cuts from the welfare budget rather than departmental budgets (with the warning that welfare cuts have proven much more difficult to realise in the past so this may have to be revisited).

Unsurprisingly they have cottoned on to the fact their predictions for this year were wrong and have raised their predictions to 1.8% but this good news in the short-term is tempered with predictions of lower growth in future years.  With the sobering warning that:

"The economy will continue to recover from recession, but at a slower pace than in the recoveries of the 1970s, 1980s and 1990s."

It also is predicting a further drop in house prices.

110%

UUP health policy has managed to become even more confused.  Previously their finance spokesperson, David McNarry argued against the ringfencing of health (twice) while others said UUP policy was:

"Health has been protected in England and Wales. The Ulster Unionist Party welcome this announcement and stresses that the same principle must be the case in Northern Ireland."

Yesterday Sammy Wilson proposed to provide the same protection to health spending as there is in England and Wales.  As Ian Parsley points out this means:

"Entirely in line with the rest of the UK, Health will be protected. Oh, and entirely in line also, social services and public safety won’t be."

However, it now appears that neither of these two positions was UUP policy.  They have now adopted a third and attacked the Wilson announcement.  Their health spokesperson, John McCallister, argues not simply for protection but for a £600m increase in health:

"...health and social care is underfunded in Northern Ireland to the tune of £600m compared with England - we believe this disparity must be rectified as part of the Budget discussions."

Over the 4 years of the CSR in strict cash terms this would require £2.4bn to be found for health (more with inflation).  This is higher than the revenue cuts of £2.2bn under the Coalition plans.  So one of the three UUP health funding policies is advocating increasing the cuts in all the other department by almost 110%.

Two pictures

After I got a pass for Stormont, one of the things I noticed early on was two pictures on the wall as you entered the canteen.  They were of the Assembly staff standing on the steps.  The pictures were taken seven years apart (IIRC the first in 2002 and the second in 2009).  Throughout that time the Assembly had not grown in powers (although by the second devolution was running without interruption).  However, the amount of space taken up by the number of staff had grown very noticeably.  A recent Assembly question confirmed this growth, almost 50% in five years.

Today the Assembly adopted a motion proposed by Peter Robinson making the Assembly Commission subject to the same cuts as elsewhere in government.  This needs to happen not only for the reality of our public finances because no cost-cutting programme will be taken seriously without it being clear that the political institutions are subject to the same as every other part of government.  They should also perhaps be thankful that more is not being sought of them.

(Note I had always intended to take a photo of the two pictures so I could blog on the topic. They would have been good visual aids to the incremental growth of government through lost of small decisions. However, I kept forgetting my camera and was told they were recently removed.  So I'm afraid you'll have to take my word for it.)

Nature

The TUV have just released a new leaflet (pdf file).  In keeping with its attempts to shift its ground and perceptions, it tries to go for some positivity:

"TUVʼs positive vision for Stormont: We donʼt want to wreck Stormont, we want to make it better for you...Jobs for you, not job for the boys: Facing up to economic reality, getting the priorities right"

However, its nature overwhelms the intent.  In terms of economic vision it manages to offer even less than the UUP document (yes it appears that is possible).  It calls for a economic strategy and that's about it.  No ideas of what it should actually contain only what it shouldn't.

They only have two ideas for savings - cut backs on the operation of government (fair enough) and abolish North-South bodies.  On the second suggestion the numbers don't entirely add up to the level of savings they claim.  A number of the tasks fulfiled by cross-border bodies would still need to happen so a Northern Ireland enitity would have to be created unless of course the TUV wishes to turn off the lighthouses and end all funding to Ulster-Scots etc etc. Even if we take their figures as accurate it would only fill about £500 million of a £4 billion hole (although perhaps they will save the rest by axeing the NHS as their economics spokesperson, David Vance, believes.)

The lack of ideas isn't the only thing undermining the "jobs for the you, not for the boys" message. The centre pages are taken up by what even the accompanying press statement admits is a "lengthy" article on the history of the methodology for electing first minister.  An article that involves some interesting re-writing of Allister's history in the DUP. He says:

"If there was a single occasion when I realised my days in the DUP were probably numbered it was 17 November 2006."

Despite this apparent realisation and objections to the legislation as soon as November he went on the campaign trail for the DUP in the subsequent Assembly election in February 2007.  There is also a bit of irony by-pass about the complaint of parades legislation being in abeyance.  Overall, the shoot of positivity gets buried by the muck-spreader.

Growth

Finally got a moment to stop chasing my tail and comment on the UK growth figures of the third quarter. 

First the estimated 0.8% is good news.  It is down on the previous quarter but appears away from double dip territory. Locally, the question will be how spread is this growth across the country?  So far it hasn't been.

Second it raises further questions about the Office of Budget Responsibility.  Its estimates are the underpinning for the cuts programme and it appears its projections for this year at least have seriously underestimated growth. The Treasury projections that were much derided as over-optimistic appear to have called it better.

Third, if the strong growth continues it will have a political impact upon the cuts programme.  The sooner and more the economy grows the better for tax revenues.  This will open up a debate about how much of the spending deficit was genuinely structural and how much was caused by the downturn. 

However, depending on their scale better revenues don't necessarily solve all the problems.  There would be the issue of paying down the national debt.  There is also the nature of the cuts programme.  When the Coalition actually looked at departmental spending cuts it was not so easy hence why the axe was shifted to the welfare budget to provide more of the notional savings than originally planned.  Welfare cuts have proven notoriously difficult to deliver in the past.  Therefore, the potential benefits of extra revenues could be diluted by the inability to achieve the proposed savings but these potential pitfalls should not get in the way of what was good news for the UK.

Challenge

The DUP has produced a set of proposals (pdf file) on how the budgets cuts could be dealt with and the budget re-ordered to drive the economy forward.  It aims to:

"balance our budget and provide the same range of services, to the same high standards, without the community feeling any appreciable level of pain...ensure that Northern Ireland emerges from the present difficulties stronger than ever to face the future."

Its package of proposals on the revenue budget includes:

• Unfreezing the regional rate by raising it at the rate of inflation for the next four years and also capping the district rate to the rate of inflation as well.
• No water charges.
• Civil Service Pay freeze for those earning above £21k a year.
• Legislation to end any entitlement to one step pay progression.
• Reducing perfromance bonuses
• Ministerial pay reduced by 5-10% through voluntary return.
• Reduce use of consultants.
• Financial Management e.g. identifying and dealing with under-spends
• Freeze in civil service recuritment.
• Quango review with proposals for abolition, merger, sharing of back office swervices or return to the department.
• Better Asset Ultilisation - the second highest cost of government is the public estate and this seeks to manage it better.
• Continuing to tackle absenteeism.
• MLAs cut.
• Departments cut to 8.
• Procurement procedures overhaul.
• Review of North-South and East-West spending and approaches.
• Efficiency Savings of 2-3% per year.
• Commitment in principle to taking and using Corporation Tax powers.
• Prioritisation of disadvantaged communities.
• Greater Utilisation of Community and Voluntary Sector.

On capital spending it recommends:

• A transfer of £100m from revenue to capital in the early years of the CSR
• New revenue streams for capital e.g. rather than selling the Port of Belfast it provides an annual dividend used for capital spending.
• Asset disposal (later in the CSR period to allow the market to recover)
• Private sector mechanism e.g. joint ventures
• Sale and leaseback of public sector assets

On jobs it outlines a number of additional jobs programmes to create 7000 jobs.

£450m pennies dropping?

Yesterday Melancthon over on the Centre Right section of Conservativehome admitted:

"...it appears that when Labour said our Eurosceptic promises were all hot air, they were right; that when Heseltine said that in government every Conservative Prime Minister is Europhile, he was right; that when UKIP said Conservatives were not to be trusted on Europe, they were right; that when I and others said that the Conservative Party had changed, and that Cameron and Hague were genuinely convicted Eurosceptics who understood what must be done and would not let us down, we were wrong."

This was before David Cameron tried to present an additional contribution of £450m to Europe as a victory on the basis they'd asked for twice that.  He'd previously called for a freeze but had quietly ditched that. 

UK fiscal policy is that the time for stimulus spending by government is over and that cuts are the policy for the next four years.  He has now agreed that the EU budget is an exception to that rule.  This retreat will also do little to curtail the European Commission plans for further growth in the budget during the next major funding round.

In an interesting coincidence this amount is about £50m more than was cut from the NI capital budget for the same period. This has been defended on the basis that there was no more money available and such cuts had to be made in the national interests etc.  Yet within 9 days of the Spending Review being released Cameron's decision has shown both statements to be false.

Note

Earlier this year the Coalition introduced cuts within this financial year.  The devolved regions were given the options of implementing or delaying them to the next financial year.  Each region chose a different  path.  One chose to make the cuts within this year.  One chose to spread it over this and the next financial year.  One chose to delay the cuts until next year.  The region that chose to cut within this financial year is on course to deliver them.  It was Northern Ireland that successfully implemented the cuts this year despite the difficulties of the system.