Tap tax may be a necessary evil
Suddenly it is time for grown-up politics at Stormont. Faced with an immediate need to find savings of £370m, all departments - and therefore all the major parties - will have to enter into serious negotiations on how to cut expenditure. The bulk of the money, some £200m, is expected to come from ongoing expenditure and the remainder from capital spending. The latter will be the most easily achieved since building projects can simply be pushed back, but trimming day-to-day spending will be more difficult.
Of course, given the recession and the huge Government borrowing to bail out the banks, the immediate savings required may well be only a fraction of the pain yet to come. That is where the Executive is going to have to be inventive, finding new ways of increasing revenue and effective methods of cutting expenditure. One revenue-raising initiative that immediately comes to mind is charging householders for water. According to reports in this newspaper, senior Stormont officials are pressing for water charges - which have been deferred since 2007 - to be introduced in 2011.
There is no doubt that water charges will be hugely unpopular and it will take courage from the politicians to introduce the so-called tap tax in the year when they go to the polls in the Assembly elections. While it was shameful that the water and sewerage system throughout Northern Ireland was starved of investment for many years, it has to be accepted that it now requires billions of pounds of funding to bring it up to acceptable standards. Continuing to defer water charges until say 2013 would cost around £1bn and that is money that the Executive simply cannot afford.
The introduction of water charges appears inevitable in the current climate but the charges must be seen to be equitable and pitched as low as possible. If hard-pressed householders here are to be asked to contribute more to the public purse the least they expect in return is efficient and cost-effective government at Stormont. There certainly is merit in the suggestion by First Minister Peter Robinson to look again at the number of departments in the Executive. The current 11 owes more to the need to ensure the widest possible spread of power rather than to produce efficient government. Reducing the number to six or seven would save money in the longer term, but it will be difficult to get political agreement to such a move. Reform of local government and the reduction in the number of councils to 11 from 26 will also save money, but again only in the longer term.
The politicians have to be mindful that many householders - and therefore voters - in the province are being hit hard by the recession. Unemployment is rising and job opportunities are few and far between. The ability, never mind the willingness, of the public to pay more and more into the public purse from their income is becoming strained. Income tax increases seem inevitable in the coming years and further indirect taxation from Stormont through water charges and higher regional rates will be strongly opposed. Convincing the public of the merit - or indeed necessity of the charges - will be no easy task for our political parties.