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John Simpson

The toughest decisions for NI's Executive now lie ahead

John Simpson


First Minister Arlene Foster and Deputy First Minister Michelle O'Neill at a Covid-19 press briefing in Stormont

First Minister Arlene Foster and Deputy First Minister Michelle O'Neill at a Covid-19 press briefing in Stormont


First Minister Arlene Foster and Deputy First Minister Michelle O'Neill at a Covid-19 press briefing in Stormont

The Northern Ireland Executive faces more difficult policy-making decisions in the next year than it has ever faced since the devolved institutions were created after the Good Friday Agreement. Alongside continuing efforts to contain Covid-19, the economy needs to be restored to generate acceptable living standards for the people who live here.

Restoring the operation of the regional economy is a multi-step process and must be phased over what may be an extended period.

In an interdependent relationship, any easing of the lockdown restrictions may have consequences for the support available to businesses and their employees as part of the job retention support funding now being paid through arrangements with HMRC.

This financial support, managed on a UK-wide basis, is adding many millions to the earnings of furloughed employees and to many self-employed people, albeit on what seems like a more modest scale.

At this stage Northern Ireland businesses need to be aware of the temporary nature of the furlough payments and the end dates for taxation concessions.

The Chancellor is caught in a dilemma. The furlough scheme in particular represents a major cost to the Exchequer which any Chancellor will hope to minimise.

Withdraw the scheme too quickly and the impact will transfer to unemployment. Keeping the scheme operational after the initial three-to-four-month period, if business operations are still well below normal, will be the expectation of many businesses but the Treasury accountants and economists will be concerned.

As the economy evolves in the later months of 2020, the voices of fiscal rectitude will be heard.

Although the Chancellor has relaxed the public spending purse strings in a very exceptional manner, the 'money tree' must be trimmed.

The immediate question for the NI Executive is how should the Executive act in the best interests of the local economy?

One of the earliest responses to the developing situation has come from the Institute of Directors (IoD). It has published a 10-point plan directed at deliverable options to contribute to sustaining and growing the local economy.

There is a critical line to be drawn in judging the merits of this 10-point plan and any other plans which emerge as other agencies offer considered suggestions to the Executive.

The Executive is expected to task the Civil Service for advice on a considered response.

The Executive might also turn to other sources of advice. This is now a critical opportunity to turn a difficulty into an opportunity.

The structure and direction of the current devolved institutions are now overdue for some radical new ideas.

Without becoming either green or orange, or Tory or trendy left, the Executive should now be ready to endorse pragmatic changes directed at more efficient performance and stronger incentives to get value for money.

That response should reconsider the way in which the Stormont budget might be tightened where NI is spending more than parity with GB suggests and reallocating some funds to local priorities.

There are two strands for ministers to carefully consider. First, there is significant scope for the Executive to use its budget to generate better jobs and incomes through a careful programming of the public sector capital programme, including those capital programmes that can be organised to use private sector finance (such as water, housing and electricity).

Second, as the Executive monitors the emergence of the business sector from the Covid-19 crisis, the first challenge is to the private sector businesses themselves. How quickly can they rebuild their order books and restore a viable contribution to the economy?

Increased public sector funding for private businesses should be minimal. The private sector entered the crisis in healthy profitable terms. Can this be resumed?

The IoD has started a debate for action by the Executive. It includes a suggested dedicated team to work on measures to stimulate economic growth.

Also, the focus is on policy to stimulate investment - where the caveat should be added, depending on a sensible post-Brexit settlement.

In parallel, close monitoring of the support from the local banks is on the agenda.

There is a complex matrix of decision-making needed from the Executive.

Belfast Telegraph