Belfast Telegraph

Dr Esmond Birnie: Reaching deal is only the beginning for any new Executive

Powersharing ended at Stormont in 2017 (Niall Carson/PA)
Powersharing ended at Stormont in 2017 (Niall Carson/PA)

Dr Esmond Birnie

Deal or no deal it remains to be seen.

Certainly, some Stormont watchers would wonder at the second part of the title “New Decade New Approach”, because some parts of what is on offer this time look like a re-statement of what were meant to be previous new awakenings through the Stormont House Agreement and the Fresh Start Agreements.

In particular, on all of these occasions there was an attempt to use the inducement of extra cash to leverage better political behaviour. It remains to be seen if that approach will work this time.

How much extra cash is there? It does look as London will provide the money to meet health pay parity. As to the much bigger sum (perhaps up to £1bn) to clear the appalling level of waiting lists (and then even more money to apply the Bengoa reforms) a plain reading of the text would seem to imply the U.K. government will provide but we’ll see if that happens.

In terms of money for infrastructure, say the £1.2bn needed to repair pot holes and our patched up roads and the £2.5bn to build very necessary water treatment and sewerage systems there is no extra money.

NI will have to make the best of the Barnett consequentials which were coming anyway as Chancellor Javid open the payment taps to build railways and digital in the north of England.

In terms of the extra funding there are three important qualifications. First, as the Secretary of State has re-iterated the cash only comes if there is political agreement.

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Second, an implied threat - if the DUP and Sinn Fein fail to sign up not only does the money go but the London Government will consider “revenue raising” which could mean higher domestic Rates and Water Charges.

Third, and probably inevitably given the mistakes which occurred in terms of funding RHI, the London Government and HM Treasury will be taking a very active role in ensuring value for money and fiscal balance.

There is a very fine balance to be struck in all of this - using extra money to incentivise a deal but trying to avoid the “moral hazard” which comes about if politicians start to think they will get more money from Westminster if there is a crisis.

The deal document contains a lot of detail about policy making and much of this is commendable - this points to what we have been missing during 2017-19. There would be a short-term and a longer term set of Programme for Government objectives. Importantly, that Programme would be linked to budget setting.

As an economist I can see challenges ahead in reconciling an economic growth process which tends to be concentrated in the two largest cities with the commitment which is stated here to balance growth across all sub-regions. Obviously there is room for legitimate political debate on this but there is a danger on too much localism in Stormont.

Like many in NI I feel some ambivalence about what is happening and may happen. Of course we need an operating system of regional government but we also need good and stable government and the rushed and pressurised aspect of the last few days could have long term harmful unintended consequences.

This is neither a mini Marshall Plan or New Jerusalem but at least we could begin to undo the reputational damage of having “no government “.

Negotiating this deal was hard work but for sure the really hard work of providing good government begins when an Executive is formed.

Dr Esmond Birnie is a senior economist at the Ulster Business School, Ulster University

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