“If implemented, the proposed spending cuts could entail a cut in the Block Grant in from the 2011/12 Financial Year onwards. The precise balance of future spending cuts, and the share to be borne by Northern Ireland, is still to be clarified. But it is clear that we are talking of a real spending cut to the Block Grant of a sum approaching £100m per annum.
However, it should also be noted that there will be some small Barnett consequentials coming to Northern Ireland, reflecting the further investment from the UK Government into employment training and also green economy measures.
“Given our very large dependency upon the public sector, there is a real danger that such cuts would undermine the level of economic activity and knock us back into are recession at a time when our competitors are climbing out of it. The cuts would also have a major impact on public services.
“Clearly, there is a major issue regarding the level of national debt that has been built up from the bailout of the banks and other measures taken to stimulate the economy during the deepest recession in decades. However, the UK Government has options both on the timing of how quickly debt is reduced and the particular mix of measures adopted in terms of spending, the tax system, and further stimulus to the economy to raise revenue.
“Alliance can be critical of the nature and scale of the UK’s response to the economic recession, such as the wasted opportunity of the futile cut in levels of VAT and the relatively small level of a green new deal. However, I do appreciate that the Chancellor is not charging recklessly to reduce debt too rapidly. Management of debt is an intrinsic aspect of modern governance.
“This level of potential cuts may only be the beginning for Northern Ireland. It is notable that the Conservatives have called it wrong on the recession throughout. They opposed measures to tackle the recession, to restore growth and to facilitate new jobs. Now today, they are determined to cut debt too rapidly and to have deep cuts in public spending, thereby jeopardising the economic recovery, particularly in places such as Northern Ireland.
“The imperative for Northern Ireland is clear. We must get our own house in order. This means the Executive ending cheap populist giveaways, starting to address the financial costs of a divided society, and prioritising investment in rebalancing the local economy. Any short-term Barnett consequentials should be invested in this transformation project, particularly in relation to the green economy. Previous opportunities to change the underlying structural dynamics in the economy have been missed by the Executive.
“Even if the Executive is successful in negotiating a full or partial exemption for Northern Ireland from the Treasury, this can only be regarded as a breathing space to deliver real change.”
ENDS