£200m stimulus package 'coming from London'
The Finance Minister has revealed that the bulk of his £200m economic stimulus package is money from Westminster — Northern Ireland’s share of funding for new public spending programmes.
Sammy Wilson said the payments were called “Barnett consequentials”, named after the Barnett formula under which public spending is allocated across the UK.
The DUP minister also denied that the package would be paid for by the widespread cuts in spending here, and expressed hope that plans to devolve corporation tax powers can be agreed later this year.
“Over £179m is covered by Barnett consequentials,” said Mr Wilson. “The rest of it is either spending brought forward or spending reallocated from other schemes and departments.
“Some of the capital spending in education (around £40m) is brought forward and is simply being used earlier than it would have been used.”
Under this deal, a department is advanced money by the Executive to bring forward ‘shovel ready’ projects but must pay back the loan a year or two later.
Mr Wilson explained that the money was mainly Northern Ireland’s proportionate share of Westminster funding for transport and housing schemes in England which are not being copied here. “We believe we can target it better to meet our needs,” he said.
One example is the UK’s First Buy scheme, a Government partnership with private builders which provides 20% loans to first time home buyers.
“We don’t have that but we are putting £28m into co-ownership housing instead. That allows us to lever in bank finance and allows the housing association to borrow money on the basis of money we had given them,” he said.
The Co-Ownership Housing Association allows house buyers to purchase half the house and rent the other half until they can afford to buy it too.
Mr Wilson will explain the stimulus package in more detail on Monday in the Assembly.
“I don’t want to make claims that can’t stand up; some of this is short-term but some of the measures will have long-term consequences,” he said.
“For example, take the money we are investing in apprenticeship schemes, in helping undergraduates study STEM subjects and in 150 PhDs we are promoting.
“That will help individuals in the short-term but it will also have long-term consequences in terms of building up the skills which we require to attract inward investment.”
The Finance Minister has long been regarded as sceptical about the devolution of powers to vary corporation tax.
Cuts in the business tax would have to be paid for from our block grant from Westminster, but the Prime Minister is now considering proposals which Mr Wilson believes could work.
“We have agreed a report that we feel comfortable with,” Mr Wilson said, referring to negotiations with the Treasury.
A decision is expected before Christmas.
Five ways Sammy could raise funds...
1 Exploit Methane gas deposits in Fermanagh
Despite environmental fears, ‘fracking’ for shale gas has halved gas prices in the US but there is environmental opposition here. This would cost nothing beyond the cost of regulating the private company which is seeking to invest £188m in development costs.
2 Streamline our drawn-out planning process
this is entirely within the powers of the Executive. Mr Wilson says “we want some developments to be exempt from planning delays”, adding the Environment Minister is bringing forward proposals for this.
3 Bring in private finance for public projects
Mr Wilson hopes to draw on a Westminster infrastructural fund to guarantee private investors against losses if they finance public projects, such as extending our gas pipeline system and possibly building toll roads.
4 Regionalise our public sector pay
Westminster and the business lobby are urging us to reduce public wages, which are higher than in the private sector, and invest the proceeds in the private sector. However, taking that spending power off civil servants would reduce retail spending.
5 Introducing water charges
Not imposing water taxes on households costs us at least £400m a year in lost revenue, which has to be cut from other programmes.
Package in detail
Finance Minister Sammy Wilson is due to make a statement on Monday which should indicate where the money will be spent.
Here are some of the main components of the initiative.
Investment & Construction: More than £40m will deliver a range of projects to support the beleaguered construction sector in the current financial year. Schools can expect a boost. There will also be £8m in extra funding for the housing co-ownership scheme, with a further £10m available in the following two years.
Education & Housing: The maintenance budget for the schools estate will rise by £10m next year and nearly £60m of capital spending will be accelerated to allow projects to start in 2013/14.
Jobs: Waged employment opportunities will be available for 1,700 young people.
Training: A further 500 work experience placements of between eight and 26 weeks will be provided for the unemployed.
Town centres: The small business rate relief scheme will be extended and car parking charges frozen.
Agriculture: An additional £15m will be available to ensure that farmers receive more money intheir Single Farm payment.
Education: A further 500 undergraduate science, technology, engineering and maths places will be created, bringing the total increase in STEM places to 1,200 by 2015.
Apprenticeships: Employers will be encouraged to offer places for an additional 900 young people onapprenticeships.
Planning: Further reforms to planning, including changes allowing developers to undertake works without the need to apply for permission and revisions to the structure of fees.