Belfast Telegraph

Saturday 26 July 2014

Editor's Viewpoint: Smoke and mirrors can’t hide the pain of cuts

Chancellor George Osborne has defended his £81bn spending cuts

As ever when complex financial statements are unveiled they are accompanied by spin, smoke and mirrors and so it was when the Chancellor unveiled his long-dreaded swingeing cuts in public spending yesterday.

Owen Paterson, the Secretary of State for Northern Ireland, said the province had got a remarkably good deal, while local Finance Minister Sammy Wilson described the cuts as worse than expected.

Just what the cuts will mean will take time to emerge. The devil is always in the detail. But even at this initial stage it is clear that a period of quite severe austerity lies ahead. Mr Wilson believes that up to 30,000 public sector jobs could be lost here over the next four years. Funding for capital projects has been decimated, with cuts of up to 40%.

In any normal economy yesterday’s announcement would present difficult challenges, but Northern Ireland’s is not a normal economy, being over-reliant on the public sector. Job losses, possible pay freezes or even cuts, the halting of capital projects which could destroy an already dormant construction industry — all are consequences of the cuts which will put the economy under pressure.

There has always been concern that public spending cuts in Northern Ireland, unless handled sensitively, could plunge the economy back into recession. While it is too early to pronounce definitively on that scenario, there is little evidence to contradict it. It does not appear that either Mr Cameron or Mr Osborne listened to fears of how cuts could reverse any possible economic recovery.

Local ministers are to meet tomorrow to discuss how to react to the Chancellor’s cuts. No one will relish their job. They will have to show a level of imagination and a degree of cohesion hitherto absent from the Executive if they are to come up with solutions to the challenges that lie ahead.

Even allowing for the fact that local government and Assembly elections will be held next year, all the parties at Stormont must put selfish motives to one side to find a common purpose.

It is evident that ministers must find new ways of saving money by declaring war on waste in their departments and ensuring that they are run to maximum efficiency. There is no doubt that significant savings are achievable which, added to new revenue streams such as water charges or increases in the regional rates, could mitigate some of the worst effects of the Chancellor’s measures, which also include a huge reduction in benefits payments — another drain on local spending power.

While there was good news for savers in the Presbyterian Mutual Society with the promise of £200m to help them get their money back again, it had the appearance of a bauble thrown to an audience desperate for anything positive.

Mr Osborne has ensured that dark days are ahead for very many people no matter what assurances he gives and prospects are as gloomy here as in any other region of the UK.

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