Can Programme for Government deliver?
Economists, John Simpson and Mike Smith assess the details of the Stormont blueprint aimed at reviving Northern Ireland's stagnating fortunes and find it largely encouraging
View of John Simpson: The Programme for Government (PfG) was overdue, but is now a key building block for the Northern Ireland administration.
Encapsulating the forward plans for the Executive in three documents released simultaneously is a considerable achievement, particularly when they have emerged from a contrasting series of election manifestos.
In a five-party coalition, some parties will be disappointed and compromises are inevitable. The first achievement is that none of the five parties in the Executive have walked away.
The PfG is ambitious, aspirational and, in itself, not a guarantee that all the actions will take place and, even more, that the proposed actions would get the targeted results.
Success for the PfG, with the Economic Strategy, can be measured in many ways. Every page of the documents lends itself to questions about possible achievements. Perhaps a major key performance indicator will be the creation of 25,000 jobs in the private sector in the next four years, up to March 2015.
The Economic Strategy suggests how these jobs may emerge. There would be 4,000 from the Jobs Plan, over 6,000 from expansion in local businesses, over 6,000 from new local businesses starting up, and 7,500 contracted through foreign direct investment.
The credibility of the jobs targets depends on the causation processes. Are there businesses prepared to invest to create these jobs? Are the competitive strengths of the local economy strong enough to incentivise extra investment on this scale?
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If this economic strategy is to succeed, then the rather imprecise targets, or ambitions, to improve the general economic infrastructure, to enhance the number of trained skilled people and improve the decision making of the Planning Service, must be realised.
As indications of good intent, the Strategy points in the right directions. An improvement of 2.5% in journey times on the key transport corridors would be welcome; indeed it should desirably be better. The aspiration for 210,000 people with skills through education and training is overdue, but some clarity on types and levels of skills and delivery timetables is now desirable.
The PfG has been written without an assumption that corporation tax powers will be devolved and then used to set lower rates. Ministers will not meet Treasury ministers until mid-December. This creates a problem for the PfG; if agreement is secured, the economic forecasts will need to be reviewed. So also will the Government spending plans.
There are now two months for consultation. This becomes an important period to argue about the detailed measures. The Plan acknowledges that Northern Ireland's economy is presently falling further behind other UK regions. Catch up will not come easily, but the Strategy offers a start on a difficult process.
View of Mike Smith: It is a well-known fact that economists have forecasted nine out of the last five recessions and so my judgment on the Executive's draft Programme For Government (PfG) should be read with a modicum of caution.
In essence the PfG represents compromise between the two main (very different) political parties in the Executive.
It contains specific targets as well as lots of softer objectives. No surprise there.
Given the current atmosphere of austerity, the downward pressure on public finance and the gloom and doom that saps business and consumer confidence, it is important that our Executive sets a clear path to a better future. This PfG is far from perfect but at least it gives some confidence to business and some reassurance to households.
If economic recovery in the UK picks up our public finances will improve. Contrast the PfG in Northern Ireland with the situation south of the border where there have been four consecutive austerity budgets and where public services are being slashed.
In terms of specific targets and goals, the PfG sets a modest target for foreign direct investment. Much more challenging is the 25,000 jobs target.
This will require not just the sustained high level of foreign direct investment but also a strong performance from Invest NI.
It is pleasing to finally see a written political commitment from the Executive to negotiate the devolution of corporation tax varying powers. After months and years of prevarication it comes as a relief to those of us who have lobbied consistently for a lower corporation tax that there is now an official policy commitment to achieving what is possibly the most significant policy change.
On the downside, the tourism targets do not seem to be ambitious enough given the platform of the upcoming Titanic centenary and the achievement of our professional golfers. In this context the commitment to bringing 90% of large-scale investments through the planning system within six months rings hollow indeed. It begs the question as to what determines a large-scale investment?
There has been a plan to construct a five-star resort hotel at Runkerry representing an investment of £125m held up in the planning system for more than 10 years!
The PfG promises 8,000 new social housing units over four years; on the face of it an impressive target but it merely continues a trend of modest social housebuilding and does not address the fundamental shortfall.
The continued priority given to developing our economy is to be welcomed but this sits uncomfortably with the serious cuts in the budgets of our higher education institutions — Queens University Belfast and the University of Ulster.
At a time when we should be |investing in our future |knowledge-based economy our higher education institutions are facing job losses and shrinkage.
Marks out of 10 for the PfG? 7!
Michael Smyth is head of economics at the University of Ulster
‘The PfG is ambitious, |aspirational and, in itself, no guarantee that all the |actions will take place, |and that the |proposed |actions would get the results