The speed at which the new Labour government got down to business after winning the recent general election drew praise from many quarters, but it put me in Roy Keane ‘that’s their job’ mode.
There should be nothing noteworthy about a government coming into power and immediately announcing initiatives that deliver against a plan. Unless, of course, that government is the NI Executive.
There was some optimism when the Executive returned in February after two years of collapse. In that period of standstill, the list of items that require urgent attention continued to grow. Our infrastructure, health system, education, childcare, and so many more items, all require attention.
Six months on, has the Executive tackled these issues with gusto? Did we see an ambitious Programme for Government (PfG) emerge in the first days back, one that inspires us to believe there’s a plan for this place? I’m afraid not, the PfG is in danger of becoming the answer to the riddle ‘what is always coming but never arrives?’
Mitigating factors, including the calling of the general election and arrival of a new UK government do provide some cover for the lack of a Programme, but it is starting to feel like something is up. Or is it that the scale of our problems is proving just too difficult to corral into a comprehensive, deliverable, funded programme?
Funding is going to be an ongoing challenge. While a PfG remains elusive, there has been activity. Crucially, a budget was passed, with around £15 billion allocated for spending on day-to-day items. This amount was more than originally expected thanks to Barnett Formula allocations following UK budget announcements and the UK Government financial deal that came with the return of the Executive. However, new money might be harder to come by.
The new chancellor Rachel Reeves has identified a £22 billion ‘black hole’ in the UK’s finances and is now pushing a line of “if we can’t afford it, we can’t do it.”
I much prefer the Keynes version of this sentiment “anything we can actually do, we can afford.” His opens up a world of possibility around infrastructure spending, research and development, while the Reeves version puts me in mind of austerity.
Certainly, cuts to infrastructure across the UK do not tally with a growth agenda, and there will be a financial impact here through the Barnett formula that works out our share of changes in public spending in England.
Our finance minister noted that the full impact of the chancellor’s statement would need to be worked through but that “all departments are going to need to take difficult decisions to live within the funding available.”
For context, when the Executive set the budget earlier this year, bids for funding from departments exceeded the money available by between 1.6 to 1.8 times the funding on offer over the next three fiscal years. Similarly, the money available for capital spending is not sufficient to meet the various requests for capital spending.
If, as seems likely, the Labour government reduces spending (I accept that it may raise taxes to generate more funds), Northern Ireland will find itself in an exceptionally tight spot. An exceptionally tight spot with mounting demands for spending.
Responding to climate change, population change, and technological advances/opportunities are key themes that will dominate our infrastructure needs over the coming years. On top of that, we have the more run-of-the-mill infrastructure needs that we have known about for many years, specifically our water and waste treatment.
Historic under-investment has meant there are significant capacity issues affecting sewerage and waste water. This is impacting on more than just waste water – latest estimates are that there are approximately 100 areas across Northern Ireland where NI Water considers it cannot provide positive responses to new development planning applications.
The inability to approve new developments poses a significant risk not only to our construction sector, but also to the thousands of people waiting for housing.
With a Housing Executive waiting list approaching 50,000 applicants, a lack of housing and an inability to build in many places is a major concern.
There isn’t a magic wand solution, especially considering the tight and potentially worsening public finances situation.
But if we had a PfG, we might be able to start understanding what our Executive’s priorities are and then give thought to how we can start delivering against a plan.
- Andrew Webb is chief economist of Grant Thornton
