Forging a manpower plan is next crucial step
Nearly 2,400 jobs will disappear from the civil service in the next 12 months. That change is only part of the larger ambition to reorganise the public sector to reduce numbers by up to 20,000. This week's plans are only part of the larger ambition.
The annual budget for the Northern Ireland government has been falling in real value over the last four years.
In the last three years, the budget has not been adjusted to match the reducing Block Grant from Westminster. The squeeze has grown and, in the budget for 2015-16, the Executive has had to face the cumulative painful implications.
Thanks to the Stormont House Agreement, the emerging budget shortfall is being tackled by steps to reduce the public sector pay bill, offer a voluntary exit scheme for public servants, and finance the initial costs by borrowing from the Treasury.
This week the Minister of Finance has outlined how an early exit scheme will work for the central civil service. Later there will be further announcements by other public sector departments. Job losses in the public sector are virtually unavoidable if the Executive is to manage the budget within the rules. The probable alternative, if the Stormont Executive had planned to overspend, was a collapse of that Executive. This was something of a Hobson's choice!
The Executive strategy is reversing what, ideally, would be the logical way to proceed. The jobs will go soon. The manpower planning of how to maintain more efficient services becomes a consequence. Sensible planning is being telescoped dramatically to catch up with the financial imperatives. Up to £700m will be borrowed to finance job losses. For every £100m-£120m borrowed, the annual wage bill may be nearly £90m lower. Even with loan repayments, the Northern Ireland Exchequer should quickly move from the current potential deficit into sounder budgeting.
The critical test, still pending, is the implementation of a strategic manpower plan to maintain essential public services.
- John Simpson is an economist