Cuts could expose Northern Ireland Executive divisions


BBC NI Political Editor Mark Devenport says cuts to be brought in through the Spending Review could cause a turf war among the parties of the Northern Ireland Executive.

Of all the regions in the UK, Northern Ireland depends most on state spending - about a third of its workforce is employed by the public sector.

Moreover many private companies, like the construction firms currently working on a number of major projects in Belfast's Titanic Quarter, rely on public sector contracts.

During the general election campaign, David Cameron compared the Northern Ireland economy to the state-run systems of the former Soviet bloc.

Then, at the recent Conservative Conference, the Northern Ireland Secretary Owen Paterson claimed public spending accounts for more than 77% of Northern Ireland's GDP.

So no wonder the power-sharing government at Stormont has been alarmed by the prospect of deep spending cuts.

Whilst they might prefer to be presiding over an entrepreneurial private sector dominated society, Northern Ireland's politicians defend the current position as the legacy of 30 years of conflict and historic under funding in local infrastructure.

Although the Troubles may be history, there remains an expensive security problem in the shape of the still active dissident republican groups.

The Stormont finance ministry has predicted that over a four-year period they stand to lose more than £1.5bn in revenue and £500m in capital - or just over £2bn in total.


The potential loss in capital spending - cash to build new roads, schools, hospitals and other big public projects - provoked a particularly sharp response from Northern Ireland's First Minister Peter Robinson and Deputy First Minister Martin McGuinness.

They argued that under the 2007 St Andrews Agreement, under which the DUP and Sinn Fein agreed to share power, the former Chancellor Gordon Brown had promised to make £18bn available in capital spending during the 12 years from 2005 - 2017.

The first and deputy first ministers raised their point directly with Chancellor George Osborne and Deputy Prime Minister Nick Clegg.

After proffering some initial comments about Gordon Brown making promises he couldn't keep, the Northern Ireland secretary of state conferred again with the Treasury.

Less than a week before the Spending Review Owen Paterson confirmed that the £18bn package remained on course.

Image caption,
Owen Paterson confirmed a promised £18bn package for NI would be delivered

This has been welcomed by most Stormont politicians, although the local Finance Minister Sammy Wilson warned the details needed clarification.

Different directions

Shortly after the chancellor announces his Spending Review, the Stormont finance ministry should get an e-mail giving a figure for the local financial allocation.

The calculation will be worked out on the basis of the Barnett formula, the same mathematical system, linked to population, which governs all the devolved regions.

Then it will be up to Northern Ireland's politicians to work out how to cut the cake up between the local departments.

Given the past history of the Stormont parties pulling in different directions, this could prove a difficult task.

The Ulster Unionist health minister, for example, argues his department should be ring-fenced to match the example being set in London.

A recent BBC Northern Ireland poll suggests 55% of local people would agree.

But other parties resist this, pointing out that health accounts for half of Stormont's budget and that, unlike its English counterpart, the Stormont department also includes social services.

That's just one example.

In addition there's a gap between how the parties want to save money or generate revenue.

The DUP's suggestion that it's time to have one merged cross-community educational system has provoked the ire of nationalists and the Catholic church.

Calls for water charges to be imposed have been rejected by Sinn Fein. There are also differences over suggestions for cutting Stormont's 12 departments and 108 assembly members.

So expect a turf war as each party battles for its own department and its own priorities. But even that may prove unpredictable.

A fresh assembly election is due in May and under the Stormont system the local parties may very well inherit different departments from the ones they currently occupy. So will they want to set any department's budget in stone?

Some observers wonder whether, once the Spending Review is announced, the local parties will be able to agree a budget.

If they can't, they might choose instead to keep the Stormont finances ticking over on a more temporary basis.