Belfast Telegraph

Saturday 29 November 2014

How much is the peace dividend worth to UK?

As ian paisley and martin mcguinness today visit the labour party conference to push for more government help, noel mcadam tells how the full extent of the peace dividend package should soon become apparent

First Minister Ian Paisley was banging the drum for business in Northern Ireland late into the evening at the Labour Party conference last night.

The DUP leader was special guest at a champagne and canapes reception in Bournemouth hosted by the Small Business Federation.

Then, early this morning, he and Deputy First Minister Martin McGuinness were again due to be glad-handing among the great and good at an Ulster Fry breakfast, focusing on the successful restoration of devolution in the province.

Should they get a chance, Mr Paisley and Mr McGuinness will no doubt take the opportunity to bend the ear of Chancellor Alistair Darling over the lingering issue of the economic boost for Northern Ireland.

A further meeting between the First Ministers, also possibly involving PM Gordon Brown, remains on the cards for the autumn, after Mr Paisley appeared to insist on it at the historic first meeting of the British Irish Council at Stormont during the summer.

Though it has been shrouded in smoke and mirrors since first announced as a carrot-and-stick Christmas Box last November, the mists are soon set to clear over the precise extent of the peace process package.

But whether the heads of the Stormont Executive can squeeze further concessions, or even a commitment to future action, remains to be seen.

The next few weeks are, however, critical. The long-awaited report from Sir David Varney, who has been carrying out a review of business tax policy in Northern Ireland, is expected in or around the second week of next month.

That will be closely followed by decisions on the comprehensive spending review, in which there is speculation the Stormont Executive could be given an extra across-the-board 1%.

Departmental permanent secretaries, who have prepared draft budget propoals, seen by ministers who were locked in discussions on the issue last week, have been working on the premise of a 3.7% increase, with inflation currently running at 2.7%.

And any earning of extra revenues by selling Government property, or even the idea of toll charges, will not fill up the Executive's coffers in time to pay the bills this time round.

With the apparent inherited debt from the Direct Rule team, Finance Minister Peter Robinson, who has already termed the Brown bonus satisfactory but not generous, has been reiterating that things are going to be tight.

The Varney review is widely expected to produce "something" on corporation tax, or at least some equivalent action, but is thought unlikely to go the whole way towards recommending the reduction 30% to 12.5% in Northern Ireland to harmonise the levy with the Republic.

One source on the Stormont committee which monitors the First Ministers Office said, cynically, however: "For all the good this review is going to do business in Northern Ireland you'd have been better off with Reg Varney."

In signalling the tightening of belts, Mr Robinson and other ministers have yet to indicate what is likely to slip down the priority list. But we will know before long. The Executive intends to publish its budget proposals and programme for government in the final few weeks of next month, which will be the first real indication of the change of direction the new devolved regime intends to take after five years with direct rule ministers at the helm.

The problems facing the province's economy are vast. For example, as Mr Robinson has pointed out, despite the recent high level of job creation, NI has fallen far behind the UK in terms of Gross Value Added per capita in recent years - down to 80% of the UK average, according to the latest figures.

Thus the hope remains that, even if it lacks leverage, the Stormont Executive might still persuade the Governments its needs are many fold. Help, however, may not be immediately manifest.

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