Belfast Telegraph

Tuesday 2 September 2014

Northern Ireland is now like a society living on a loan from Wonga

The failure to control our public finances is an alarming symptom of a Government that can't agree on anything, says Liam Clarke

Liam Clarke
Liam Clarke

Is Stormont running out of road? That is the question on everyone's lips as the Executive struggles on, unable to go into recess because it cannot balance the books.

In some ways things are going well. The economy is at last showing faint signs of recovery and, in the last few months, there have been a flood of job announcements.

In most societies new jobs would be creating a feelgood factor and Government leaders would be basking in the warm glow of voter approval.

It isn't happening because the DUP and Sinn Fein duopoly which effectively runs the place is allowing a sense of crisis and doom to develop. It has been building up for over a year, but it came to a head yesterday.

The most significant failing in the long-term was probably the failure to agree the June monitoring round. This means that they have not been able to adjust departmental budgets to cover over- and under-spends in the last few months.

It is nearly all cuts they have to agree this month. That is because changes in welfare payments in Britain mean we get less money in our block grant. The obvious way to balance the books is to make the same welfare changes here as London demands.

Sinn Fein has blocked that to protect the poor. It is also because, as an opposition party in the Republic, it has opposed cuts there and doesn't want to look like hypocrites to the southern electorate by agreeing to similar cuts here.

As a result, the bill is rising steeply and can only be met by imposing new taxes locally, which nobody is considering, or else cutting other budgets. Three per cent is the proposed cut in this monitoring round and if we protect high-spending departments like health it will be 6% or more for the rest as we try to recover £100m in overspend. Every year the bill will rise until it reaches into the billions.

We are now like a society living on a loan from Wonga. It will be called in sooner rather than later, and when it is we will lose our financial autonomy, just like the Republic during the bailout. The equivalent of the bailiffs at the doors will be if departmental accounting officers – civil servants –refuse to sign off on bills because the funds aren't there to meet them.

If it isn't handled at that point, the permanent secretary of the Department of Finance, another unelected official, will be obliged to step in and cut budgets by up to 25%. That would be like the receiver taking over a failing firm. It is hard to see Stormont surviving that.

Over the next week ministers will try to square the circle to prevent this slide into bankruptcy. If they don't manage it then the bill will be higher in September when they come back.

Relations are now so bad between the two big parties that it seems unlikely anything more than a temporary patch-up job will be agreed.

The bad relations are shown in their inability to tackle what should be a fairly minor row over parading. That was the other big failure yesterday. If Sinn Fein is focused on Dublin, the DUP is in thrall to the Orange Order and its concerns over parading in north Belfast.

Many voters are left wondering if this form of partnership Government, necessary earlier in the peace process, has finally run into the sand. You hear it in the streets every day, despite the job announcements.

David Ford of Alliance has picked the right time to suggest a reboot of Stormont. Many of his ideas, like a voluntary coalition and an end to blocking tactics, will strike a popular chord. If Sinn Fein and the DUP don't learn to work together again, the clamour to get rid of their automatic partnership will grow.

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