The CBI, with the help of professional advice, says that reduced Government spending can be managed.
All three of the larger private sector business organisations have now, using polite but unmistakable language, told the Northern Ireland Executive that there are practical ways in which the Executive budget can be better managed with less damage to public services. The Executive is now challenged to offer a serious response to the proposals from the CBI and the Northern Ireland Chamber of Commerce (NICC), along with other constructive comments from the Institute of Directors. No longer will unconvincing reassurances that ‘the economy is a top priority’ suffice.
Together the proposals combine the logic of a search for mechanisms to grow the private sector and an incisive ‘an bord snip’ (as developed by McCarthy for the Irish Government).
The 50-page CBI document is cogently argued and offers conclusions to keep the budget in balance by making cuts in public spending of up to £1.1bn over four years through a range of changed mechanisms together with measures to raise £400m extra revenue.
The arithmetic in the CBI document is not without weaknesses. There also seems to be a degree of double counting of some ‘savings’. That said, the proposals merit close examination.
Perhaps the critical test of the integrity of the Executive is that it should resolve to have the CBI and NICC proposals independently assessed against professional evidence from the civil service.
An external challenge, with guidance to ‘think the unthinkable’, would give the devolved government a constructive response.
Up front, the CBI proposals are pragmatic and not restricted by political constraints. Examples are offered of public services tested by out-sourcing, by introducing competitive options and by mutualising key organisations. Some of these options have a
two sided outcome: the public services may be more efficient and the private sector may be stronger when it is the chosen provider.
If political dogma builds in a constraint on more efficient outcomes then the implication is clear: the economy is secondary to other priorities.
Terence Brannigan, the chairman of the CBI in Northern Ireland, rejects the simplistic argument that ‘growing the private sector’, on its own, is the answer to correcting the imbalance between the public and private sectors.
The CBI examination is extensive even if not always rigorous. The arithmetic is not presented in an accounting format. Nevertheless, there is useful quantification. In parts, the CBI has obtained useful evidence from within the public sector.
The proposals point to annual public spending reductions building up over four years, of about £300m, including £125m from freezing the public sector pay bill, £100m by reducing the bill for public sector pensions, along with reduced consultancy spending, a review of prescription charges, concessionary transport fares, legal aid spending and the costs of school transport.
These suggestions are followed by five topics where gains might be found if “every pound [was] well spent” building up to about £170m, including a possible big gain from opening up some public services to greater competition.
The biggest and most ambitious ideas are identified as ‘re-engineering public services’ where a cumulative reduction by 2014 of over £450m is anticipated.
The re-engineering focus is on re-configuring health and social care, re-engineering housing, re-engineering education and (in a new area for examination) re-engineering policing and justice.
Among the suggestions for ‘bridging the funding gap’ the Executive is tasked to raise domestic rates, introduce water charges, adjust housing rents and consider specific charges for some medical services. Additionally mutualisation of the Housing Executive and NI Water is invited.
These proposals are a solid agenda that calls for careful implementation. They would be a phased four-year response, to match the Treasury allocations. The test is whether the Executive is collectively ready to make a start.