Stephen Farry stated: “It is clear that the UK Government has a major challenge to rebalance the public finance, in the wake of efforts to tackle the economic recession. While there remains an important debate over the timescale over which the level of debt is addressed and the balance between tax increases and spending cuts, the fundamental challenge cannot be escaped. This applies to Northern Ireland, just like all other regions of the UK.
“The rhetoric from the Chancellor may be one of fairness but the reality is somewhat different. In particular, the increase in the level of VAT is a regressive move.
“Some of the measures relating to assisting business are welcome. In particular, the phased reduction in corporation tax is helpful to Northern Ireland. However, it does not address the fundamental disadvantage that Northern Ireland faces on the island of Ireland from the much lower rate in the Republic of Ireland.
“Future spending projections suggest a cut of around 13% to the Northern Ireland Block Grant by 2014-15. This would equate to over a billion pounds coming out of local spending. This reality intensifies the financial challenge facing the Executive.
“Alliance believes that the Executive needs to respond in a number of ways. First, there is an ongoing challenge relating to the failure to overcome the financial distortions of a divided society.
“Second the Executive cannot afford to keep ducking what is an inevitable decision on the introduction of water charges. The continued deferral of water charges creates a major distortion in our expenditure profile and requires much greater pain in key public services such as health and education that would be faced by our counterparts in neighbouring jurisdictions.
“Surely, the matter can be no longer about whether water charges are introduced but rather how they are introduced in terms of fairness and a link to ability to pay. For any party that care about social justice and quality and accessible public services this is the only honest position to take.
“Third, there will have to be a reassessment of spending priorities. Alliance believes that there needs to be a review of the profile of local spending and where we diverge from the UK average profile make assessments regarding how appropriate these differences may be. There also needs to be a greater emphasis on prevention work and early intervention, and collaboration between Departments on shared outcomes.
“These challenges can only be faced if parties are prepared to be open and frank with people, and to worth together for shared objectives.”