Leaders must put go-ahead policies on negotiating table
Although our economy may not be in perfect shape, it is always important from the outset to bear in mind that significant progress has been made in the last few years.
Our inward investment record has been really impressive, we have legislated for devolved corporation tax and in the labour market we have seen the number of unemployment claimants fall for 27 consecutive months.
However, challenges still remain in terms of creating high levels of sustainable economic growth and raising local living standards.
Unfortunately, there is no single economic policy that will act as a silver bullet for Northern Ireland. Rather we need a sustained improvement in a number of economic levers that could ultimately weave together to raise productivity, economic growth, wages and living standards.
In any post-election talks with a new UK government, Northern Ireland policy makers could legitimately call for enhanced levels of assistance if such assistance was entirely focused on supporting our journey to economic self-sufficiency and raised living standards for all.
Post-election discussions, in my view, could target the following issues:
- Bring Northern Ireland university funding levels per student up to the UK equivalent: Falling university places for local students combined with fewer lecturing positions will have a long-term impact upon our future labour market.
In real terms, the two local universities have suffered a 28% reduction in funding over the last four years. If Queen's University Belfast and Ulster University were located in England they would have an additional £45m per year to spend on students and services.
For Northern Ireland to have a fighting chance of being economically successful we need to devote far greater resources into higher education. If we do, we will reap the rewards in the longer term.
- Support for developing a massive overhaul of the local education system to reduce the current high levels of underachievement in certain areas: achieving long-term peace in Northern Ireland will be severely hindered if we do not deal with the social and economic exclusion which affects those with no formal qualifications.
- Bringing infrastructure investment per head up to comparable UK level: The latest Northern Ireland Audit Office report entitled "DRD (Department for Regional Development): The effectiveness of public transport in Northern Ireland" highlights the fact that our transport investment per head "has been much lower compared with other parts of the UK". Expenditure on road maintenance is consistently, and usually significantly, lower than elsewhere in the UK.
Yet infrastructure and connectivity are key drivers of economic growth. Northern Ireland's current Transport Strategy focuses on improving connectivity "within the region". However, this approach is far too insular and therefore developing national and international connections must also prioritised. EU and matched funding will be needed to build better connections to both Scotland and to the Republic of Ireland. Infrastructure spend on connectivity for this region is as a long-term investment that will benefit everyone's economic prosperity.
- Recognising and planning for future fiscal challenges is critical to today's spending and saving decisions: local fiscal policies tend to be short-term in nature because of the budget process and also because long-term fiscal analysis is not available.
Having long-term fiscal plans would make it much easier for our policy makers to negotiate with Treasury around public expenditure plans. This region suffers from a dearth of independent fiscal advice and forecasting of the type that independent fiscal councils produce in most advanced economies across the globe.
Politicians could negotiate for a share of the resources and analysis carried out by the national Office of Budgetary Responsibility to be Northern Ireland-specific.
Clarity could then be brought to bear on some of our larger fiscal options such as devolved corporation tax and how will we pay for it. Independent advice is also needed to help us to make some of those less palatable decisions around raising local revenue streams.
- Vat reduction for hospitality sector: having a great tourism offering is one thing, but when it costs significantly more than the tourism offering in the Republic of Ireland we are left at a distinct disadvantage.
Pubs of Ulster have been leading a campaign to reduce Vat rates for businesses in the tourism sector in Northern Ireland. Indeed Vat reductions for the tourism sector have been introduced in the majority of European Union countries to promote tourism, and to protect and nurture jobs. This is now a UK-wide campaign and if successfully negotiated should have no impact on the Northern Ireland block grant.
For the sake of our future stability, our leaders must put some progressive and inclusive policies on to the negotiating table.
Economic policies that will benefit everyone are needed if local leaders are to receive willing support from our partners in the governing administrations across the UK, in the Republic of Ireland and in Europe.
Angela McGowan is chief economist at Danske Bank