Belfast Telegraph

Stormont parties need to impress us with solutions for economy

By John Simpson

Will the election mean that business friendly improved policies will emerge from well informed, carefully targeted and fully costed election manifestos?

Going on past experience, the ambition to expect good quality election literature may be wishful thinking. Nevertheless, as a request (or a veiled tension) there are now sufficient well informed critics in the electorate so that the power of persuasion on the merits of policy to build, expand, grow and advance the economy should have some influence.

The election commitments of serious parties should be credible. First, are the policy proposals consistent with the successful functioning of the devolved powers available to Stormont?

Do the policy proposals start with a valid appreciation of how to help the local economy to be more competitive?

Do manifesto proposals depend on expectations of financial support from another Government (London or Dublin) or agency (such as the EU) which can reasonably be described as reliable?

The political parties all emphasise the need to grow the economy. However, there is an often unstated, or overlooked, tension in deciding priorities for economic policy. Each political party would accept that in setting policies and allocating funding, there can be a trade-off between social, environmental and economic objectives.

An early and dramatic choice looming for the NI Executive is the way in which the Stormont budget will be adapted to the emerging cost (in reduced revenue from the Block grant) when the new corporation tax rates are introduced in 2018 and beyond. The continuing Stormont budget, operating within the constraints already set by Westminster, is already well committed. Will any of the political manifestos offer a firm statement on how this funding problem is to be tackled?

This would pose a real concern if political gesturing resorted to wish list answers saying that this funding could come from the expected growth of the economy. If the lower corporation tax rate does induce a faster rate of business investment, realistically this will not become evident for three to five years. What happens to the Stormont budget meantime?

Is it more important to minimise any rent increases in public sector housing, so that larger amounts are not available for interventions in increasing the number of people with labour market skills? Is it more important to keep rates bills lower than in England, even if that means smaller amounts of funding are available for investment in vital infrastructure or to enhance the flexibility of a stronger budget for Invest NI?

The number of potential trade-offs is infinite across the whole range of Government policies. There are unspoken but important trade-offs between customer electricity prices and the incentives paid to increase the supply of renewable energy. Into that matrix also comes the impact of not knowing whether there is, or is not, a supply of NI natural shale gas waiting to be assessed. Not knowing what could and should be known makes policy making a less well informed process.

For the incoming NI Executive, the scope for policy variations is very large. To the critics who argue that Stormont does not have much scope to make a difference, a brief review quickly points to significant, real choices.

Stormont has a continuing dilemma. There are plenty of policy and spending options to improve public services. Searching for savings or redundant services to close is never easy. Incremental savings, efficiency improvements, productivity enhancements all appeal. But delivery is difficult.

A new Executive, emerging with a shared programme for Government, offers the easiest moment for the adoption of radical proposals. What parts of Government should face major changes? How much further can the 'early leaver' scheme go to reduce the size of the public service?

Political manifestos are critical parts of the democratic process. At the time of writing, few have yet been fully read. In the next four weeks, that pleasure awaits the electorate and this writer.

Belfast Telegraph

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