'Choices and Consequences'

April 16 2010

This wide-ranging and far-reaching discussion was chaired by John Hunter CB, the Forum's Chair.

Against the background of financial and economic crises the May General Election, it was projected, would mark the end of a political settlement based on an implied assumption of effortless economic growth and increased public spending - from 36.8 per cent of national income in 1999 to 47.9 per cent in 2009. Harsh cuts in public expenditure were assumed to be just around the corner. The scenario was a UK poorer than could ever have been imagined only a few years ago. Whoever would win the election would have to set about building a consensus for cuts and this would be the big challenge for the next government in Whitehall. Even with a return to economic growth, it was projected that the incoming government would have to find savings or extra revenues of the order of £100 billion. Deep cuts in spending and increases in taxation were likely to follow. Whatever the hue of the incoming administration the fiscal choices would lie only in the precise balance between the two and in the matter of timing: sooner or later.

With Northern Ireland having only limited tax-raising powers the regional economy was acknowledged to be overly dependent on public expenditure. It was noted that other UK regions were similarly dependent on their public sectors and spending funnelled through them. It was also acknowledged that the extent to which the regions would be affected or protected from the harsher realities of what lies ahead would be likely to depend on a number of factors such as the extent to which budgets for reserved and retained matters may be top sliced. Mainly however, these questions were matters for political negotiation between the devolved administrations and otherwise local authorities as to what their shares of the fiscal burden would be.

Nevertheless, the underlying assumption was that Northern Ireland would have to achieve real spending cuts and that there would be difficult choices to be made about spending priorities: greater and lesser priorities; and then about where the axe will fall, what to cut, where and how much to cut. At the same time every decision or compromise reached would have its consequences in the sense that that there will also be opportunity costs arising from whatever decisions were made.

With this the back-drop, for the purposes of discussion the programme for the symposium involved a working assumption that cuts of the order of 10-15 percent would have to be achieved over a period of three years. Discussions were informed by two presentations by Mike Brennan, Head of Strategic Policy Division at the Department of Finance and Personnel. The first provided an analysis of 'Where the money goes' now, and the other centred on the range of cuts surmised above: 'What if the Northern Ireland Block was to be cut' by...

If the widest possible range of services were to be protected to the maximum extent, it was further assumed for the purposes of discussion that savings to be effected would have to be achieved through some combinations of efficiencies, structural and innovative reforms; or be achieved through finding other ways of providing for or delivering services. Moving into territory there was time only to touch on in the discussion, there was an additional and fairly tentative assumption that public agencies would find more efficient ways of working together to deliver what people needed in the round and thereby seek to transcend functional and professional silos.

While the scenario for discussion was bleak the tone of discussions need was not all doom and gloom. While the next few years would inevitably raise immense challenges, on the positive side the symposium concluded that budgetary constraints would create opportunities for policy innovation in response to complex issues and questions about how to develop models of collaboration and effect local transformation when there would be less money to go round. There would also be a cross-sector dimension and wider opportunities opening up as a result of efforts to source the capital needed to renew infrastructure, in the potential to achieve efficiencies through collaboration on procurement and asset management, and in outsourcing support functions and other wise finding alternative means to deliver non-core services.

Link: Symposium Programme.