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CBI chief: consider ending free travel and prescriptions

Populist policies such as free travel for pensioners and free prescriptions may have to be scrapped to make vital efficiency savings in Northern Ireland, it has been warned.

Nigel Smyth, director of the Confederation of British Industry in Northern Ireland, told an audience of civil servants yesterday that they must learn from the private sector cost-cutting of the past two years if they are to make the £370 million of cuts in public spending necessary by 2011.

Northern Ireland's Executive must also find a way to cut a further £128m required by the new coalition Government to make up the province’s share of £6bn in public sector budget cuts.

An Agenda NI seminar on public sector finance in La Mon Hotel in Co Down heard that Stormont needs to consider a range of radical measures to slash budgets:

  • Populist policies such as free travel for pensioners and free prescriptions may not be affordable.
  • Public sector pay cuts are necessary, particularly for high ranking civil servants.
  • Huge savings could be made by cutting public sector sickness levels.
  • The amount of money spent on hospital care in the NHS in Northern Ireland needs to be reduced.
  • The amount spent on consultants and quangos should be slashed.

Business leader Nigel Smyth told the conference: “We need a very good plan to find our way out.

“We need to revisit populist policies — can we afford free prescriptions or free public transport for over 60s? Neither are targeted at those most in need.”

Efficiency savings are not going to be enough, he said.

“There must be much more radical thinking because the world has changed since Lehman Brothers. These guys need to wake up and smell the coffee.”

Mr Smyth said pay cuts in the public sector were also necessary and compared the condition of wages in the public sector with private businesses.

Public sector pay went up by 2.8% in Northern Ireland in 2009 but fell by 0.9% in the private sector in the same period. Average public sector pay here was now 35% higher than the average private sector pay packet.

“If we have a 1% reduction (in public sector pay) that could save us £55m every year. Let’s target these at the top end. With some redundancies, natural wastage, those on lower pay on the frontline could see some modest increases.”

He also raised the issue of high levels of sickness absence in the Civil Service. “Sickness absence has been excessive in the public sector.

“The private sector rate of six days in the UK has come down to 5.8 days per annum while in the UK the public sector rate of absence is 8.3 days. In good old Northern Ireland, that’s 10 days, which has come down from 15 days not so long ago. If we brought it down to private sector levels, we could save £25m.”

He also singled out NHS spending. “We spend over 60% on hospital care but other places spend a great deal more on community care and that aids the problem much earlier. Spending on acute care is not a long-term solution.”

Consultants often did not add value. “They cover backsides in things and don't add value. There are also hundreds of Press officers in Government departments and quangos not adding a great deal of value to the services that you would expect.

“Those guys up the Hill need to be preparing now for what’s going to come down the line,” he added.

The conference also heard from Robert Watt from the Irish Department of Finance who described the experience of public sector cuts in the Republic.

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