Belfast Telegraph

Monday 22 September 2014

How can Stormont sell its economic policies to voters?

Day three of our poll shows that voters are lagging behind Stormont ministers on the measures needed to create new jobs, says John Simpson

Sammy Wilson and Arlene Foster, as the ministers with central responsibilities for steering the local economy, face a major hurdle in persuading the public of the merits of implementing the agreed Programme for Government (PfG).

Today's opinion poll reveals some stark messages.

• The campaign to allow Stormont to reduce corporation tax for local businesses does not have overwhelming public support

• People are fearful of the effects of reducing public spending to compensate for lower corporation tax revenue

• If there has to be a choice between higher taxation, possibly water charges, and lower public sector spending, then the majority prefer cuts in public spending.

This response from the general public is a salutary jolt for the Executive.

The Executive must devise and implement policies to support jobs, grow the economy and offset the wider UK, and European, recession. The inherited circumstances mean that real living standards have fallen and, at least until 2014-15, the Stormont current budget will fall by about 1.5% each year. The capital budget is nearly 20% lower.

The opinion poll asked sharp, pointed questions affecting the scope for local decision making.

Lower corporation tax: the UK Treasury has been extensively lobbied by the main political parties, the main business organisations and several hundred businesses for Stormont to be allowed to reduce the current level of corporation tax. Such a change should attract more investment and possibly thousands of jobs.

The Treasury has not formally agreed to the change but has made it clear that a reduction in tax revenue must come out of the Stormont budget. If it is agreed, then legislation in 2014 would allow the change from 2015.

Public opinion is lagging behind the politicians. In all age groups, all social groups, and each religion group, a small majority do not accept that there should be reduced public spending to pay for the change. Since the public sector spending consequence is a condition of the change, a negative opinion is implicitly a rejection of the proposal. Overall, where an opinion was expressed, 53% said 'no' and 47% said 'yes'. In a further surprise, private sector employees were more critical than public sector employees: 57% said 'no' versus 54%. Catholics were more critical than Protestants: 63% said 'no' versus 56%.

Failure to win a stronger endorsement for the tax change is equivalent to a failure to endorse the economy and jobs as the main priority for the Executive.

Spending cuts instead of higher taxes: the Stormont budget is modestly squeezing the levels of current spending alongside a major reduction in capital spending. If the Executive wants to balance its books and to do more to rebuild the economy, there might either be a redistribution of spending, with cuts in some places to release money, or a search for extra revenue from higher taxes or charges.

The background to this dilemma is that, compared to the rest of the UK, Northern Ireland already has proportionately higher public sector spending and has a lower level of taxes and charges, whether in rates or the absence of water charges.

The poll asked a useful question when it posed the choice between cuts and improved efficiency in public spending OR increased taxes and/or charges.

The result is not surprising. People prefer cuts rather than extra taxes and charges. This may mean that people see cuts as more likely to affect other people, not themselves, whilst extra charges feels like possible personal pain.

The public response is heavily in favour of cuts by a ratio of nearly 2:1, 65% to 35%. The groups most in favour of additional cuts are biased more to the private sector than public sector, more by men than women, more by 25-44-year-olds and (slightly) more by Catholics than Protestants

In no group is there a majority in favour of extra taxes. There are more in favour of higher taxes amongst the wealthier AB social group and in the people aged 65+ (who may hope that extra taxes would not hit pensioners).

The poll reveals an important unresolved tension where the Executive has been reluctant to endorse an unpopular option.

As part of the debate about reforming the public sector there has been a number of suggestions that some public services might be outsourced to social enterprises or private sector competitors.

Emerging from this dilemma of choosing between cuts and taxes, the findings in the other parallel poll this week, on out-sourcing public services is compelling.

By a majority of three to one, (77% to 23%) public opinion would accept some projects of this kind. The group showing least support, even then from only a minority, were 30% of public sector employees who were hostile. From the private sector, 89% supported the change.

These polls are a serious wake-up call. The Executive search for a stronger economy and related policies is moving in the right direction. Sadly, public understanding and commitment needs to be improved.

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