Belfast Telegraph

How real government made its belated bow

Sammy Wilson's draft Budget is the product of old-style horse-trading: a canny mixture of creative accounting couched in populist rhetoric, writes Mike Smyth

On the face of it, yesterday's Executive Budget came as something of a surprise to economic commentators.

Speaking from a personal perspective, I had expected something of a 'Walter Mitty', escapist Budget, but I was almost shocked by the mixture of pragmatism, populism and creative accounting.

Budgets usually do not please everyone - and Sammy Wilson's yesterday was no exception.

Austere Budgets are guaranteed to stir the blood and provoke hostile reaction, but I think that, in the cold light of day, many people will form the view that yesterday's exercise sure beats the hell out of the kind of politics that we have become sadly accustomed to in Northern Ireland.

It was a nailed-on certainty that there would be a freeze on the cost of living element of public sector pay.

It was also fairly predictable that resources would be shifted from the current Budget into capital spending to help reduce the effects of the drastic reduction in the public capital investment programme.

However, the decision to protect the employment and enterprise budgets with some additional help for job-creation showed real pragmatism.

The decision to kick-start the Green New Deal programme will go some way towards stimulating the moribund construction sector.

There was also a strong social element in the Budget with the creation of social protection and social investment funds.

These measures are to be commended given the very tight settlement under the Comprehensive Spending Review.

To some extent, the Minister of Finance has begun to grasp the nettle of local revenue-raising.

Once again, the opportunity to introduce water charges has been ducked and the longer we postpone their introduction, the more difficult the public spending choices will become.

A public-sector pay-freeze could have been avoided by introducing water charges.

Public sector workers reading this article need to ask themselves what is so terrible about asking households to pay for the water that they use? After all, everyone else in the United Kingdom does so.

So we are going to have a plastic bag tax that might raise £16 million-per-annum. Why not go further and bring in a mobile phone tax which would raise a lot more money?

There will be a levy of £125m on the Port of Belfast and an £80m levy on housing associations. This latter proposal looks decidedly woolly.

I am the treasurer of a social housing association which has some financial reserves - as most businesses should have.

These reserves are more of an item of accounting than real cash resources and I fully expect this proposal - if it is implemented - to push many social housing associations into insolvency.

Is that what the Northern Ireland Executive really wants? Maybe these social housing associations can then dip into the social hardship fund.

The decision to unfreeze rates is welcome.

When the rates freeze was introduced back in 2007, economic conditions were very different and a modest inflation-linked increase is the least that might have been expected.

All in all, the Draft Budget looks like a pretty good set of compromises that reflect the political composition of our Executive.

No single party got everything that it wanted - and there are signs of some difficult compromises throughout the package.

Northern Ireland politics has come a long way in the peace process and while we in the chattering classes frequently express our impatience and frustration at the seeming lack of real political horse-trading here, Sammy Wilson's draft Budget may signal the start of real, normal politics.

Let us hope so and let us all examine his proposals carefully and take part in the very necessary debate that now follows.


From Belfast Telegraph