PwC’s Chief Economist, Dr Esmond Birnie, met with Owen McQuade to discuss the prospects for the local economy and what the Executive should do now. Hard questions must be asked about the purpose of government and any new jobs must create wealth.

Looking at the short-term prospects for the local economy, Esmond Birnie sees the province’s economic plight as “the classic glass; half-full or half-empty”.

The recovery is looking mixed but he does not see this as indicating a double-dip recession. “This year as a whole will see positive growth but it will be lacklustre,” Birnie comments. “We expect a weak recovery with Northern Ireland growth likely to hit 0.8 per cent in 2010 and around 1.8 per cent in 2011; that’s well behind likely UK-wide growth of 1.6 per cent and 2.2 per cent, respectively.”

On reflection, he thinks the austere June emergency Budget was unavoidable. “It was essential to sustain good confidence in the debt market,” he surmises, “and that made it a necessary Budget.”

With £6 billion Whitehall cuts already inherited from the last government and Osborne adding a further £17 billion, he foresees the £23 billion reduction in current and capital spending as a major challenge (and once inflation is allowed for the reduction will be even sharper).

As regards the local impact, he says it is not possible to “do a precise readacross, a sort of negative Barnett calculation.” However, based on the £128 million local impact of the coalition’s £6 billion of initial UK-wide cuts, taking a further £17 billion out of public spending could mean the Executive facing an additional £500 million reduction.

“And when you add in other factors like the impact of Civil Service equal pay and the absence of income from water charging, you get up towards £1 billion in cash terms and well over that in ’real’ terms.”

Progressive austerity, in the Treasury’s words, is his predicted result from the effects of the income tax allowance, increase in VAT and tax credit changes.

“However, Northern Ireland’s income distribution is already skewed, with proportionally more on benefits, and a bigger public sector than in the other eleven UK regions. That means that any significant review of public sector spending is likely to hit Northern Ireland more,” he remarks.

“The £64 million question is: ‘Will the private sector compensate for this pain?’”

Birnie explains that some forecasts suggest that up to 10 per cent of UK public sector jobs – 600,000 – will be lost over the next four to five years: “Reading across to Northern Ireland that equates to 22,500 jobs, or 4,000 to 5,000 jobs a year. Countering that equates to 1 per cent growth in private sector employment each year, not unreachable but with the world economy still depressed, this would be a major challenge.”

In the anxiety over jobs, it is also “crucially important” that the Executive does not forget the Programme for Government’s (PfG) targets on GVA (gross value added), which has not grown alongside increases in employment.

The PfG aimed to attract 6,500 new jobs from inward investment, with those jobs increasing the value-added in their particular sector. Commercial exploitation of R&D was also pledged, to promote higher value-added economic activity and Invest NI was tasked with promoting value-added growth projects from locally-owned companies.

“Over the last 10 to 12 years the Northern Ireland economy has had a credible growth in employment of 1.5 per cent, or 12,000 people, per annum, but we didn’t combine this growth [with] wealth creation”.

Growth in employment, he says, was mostly through the expansion of retail and call centres. “While we created employment, we weren’t increasing the average GVA,” he states. “For every job we lost, we created a new job that was actually worth less.”

This need to balance job creation with wealth creation is therefore a “real dilemma” for policy-makers and politicians.

Reshaping the economy

A key objective of June’s emergency Budget was to reshape the UK economy, with growth coming from increased exports and investment, rather than consumer and government spending. Birnie sees this as being in the “right direction”.

The Office for Budget Responsibility’s medium-term forecast indicates a slow modest recovery up to 2 per cent underpinned by investment and exportled growth. However, the devaluation in exchange rate, by a quarter, has not so far translated into much growth of exports from either the UK or Northern Ireland.

“There is a view that there is a lag of several years,” he comments. “Another, more pessimistic, view is that the UK has lost its core manufacturing capacity and can’t expand. Manufacturing is now based in niche markets and not on volume.”

Investment by industry has been dependent on bank lending “and we know the problems there,” he adds.

Anticipating the autumn spending review, Birnie observes: “Obviously this is a challenge, but it is also an opportunity.”

Government, in his view, should start with a blank sheet of paper, asking the difficult questions such as: “What is government for? Are there things better delivered by the private sector? Are there things that could be shifted from central to local government? Is there a bigger role for NGOs?” He mentions that the Scottish Government’s review of spending took such an approach and asked such fundamental questions.

Corporation tax

Birnie has a mixed view of the prospect of a lower corporation tax regime for Northern Ireland. He explains that if Northern Ireland had lower corporation tax, the Executive would have to pay a similar amount, i.e. £150-200 million, from the spending block to be compliant with the Azores ruling regarding European law.

He notes that complying with the Azores ruling would offer the Executive a wider range of tax-raising powers than just control of corporation tax. “The experience from RoI is that it is better to use tax-varying powers in certain areas,” he remarks.

“There is fixation on headline tax rate. Even if we got it down to 12.5 per cent, many countries have lower rates, and then it becomes a race to the bottom and a futile battle.”

As an alternative, he proposes: “Why not create a tailored package of tax incentives for R&D and IP [intellectual property]?” Tax breaks could be used to encourage and incentivise R&D and its commercialisation, which in turn would raise GVA in a way that low corporation tax wouldn’t.

The economic indicators, meanwhile, show the world economy in recovery mode, with 3.0 per cent annual growth, but the drivers of growth have shifted, with a higher proportion coming from the socalled BRIC countries of Brazil, Russia, India and China, particularly China. “The Chinese economy has as high a proportion of GDP growth as the US. The US is still the biggest economy by far but China is growing at 10 per cent each year,” he points out. “This has implications for exporters to look beyond the Eurozone. India was the second largest source of inward investment after the US during 2002-07.”

Birnie also notes the strong emphasis placed by the Coalition Government on a new, multi-polar view of the world economy, with ministers seeking to forge special relationships with India and China, and looking beyond the Eurozone and US.

PwC has already made a comprehensive submission to the Chancellor in respect of options for the Comprehensive Spending Review and has copied its proposals to Finance Minister, Sammy Wilson. Birnie says that by taking the ‘clean sheet of paper’ approach to spending, it could be possible to make a substantial dent in the likely level of cuts the Executive might expect over the next CSR period.

“That would deliver fundamental change, a new change from the ground upwards whereby we would try and justify all programmes,” he says in conclusion.

Two further sets of questions, though, must be answered. “Government should ask how effectively they are delivering services and if the private or voluntary sectors could deliver them more efficiently. Another aspect is that they would ask citizens: How much do you value those programmes?”

As the Assembly prepares for its first justice legislation, agendaNi summarises the main proposals being considered.

When the Justice Bill is debated on the Assembly Chamber’s floor this month, it will be marking a significant legal milestone. Stormont is now on a par with Holyrood, Westminster and Leinster House by debating and passing laws on criminal justice. It is also the first Bill brought forward by an Alliance Minister.

A miscellaneous provisions Bill was mooted in the Hillsborough Castle Agreement in February, and as the title suggests, this would essentially be a broad, tidying-up exercise. David Ford hopes the law will be passed before the next Assembly election. He admits this is a “relatively short timescale” but allowed officials to brief the committee before the summer recess, to speed that up.

Five main subjects have been considered by the committee i.e. victims’ and witnesses’ needs; legal aid; efficiency in the courts; crime reduction partnerships; and offences at sports events.

Sport

Disorder at sports grounds is relatively rare in Northern Ireland but has happened, as shown by the Linfield v Glentoran crowd trouble in December 2008. The proposals cover large football, GAA or rugby venues.

There will be a clampdown on offensive chanting and songs; the word “offensive” covers all the ‘section 75’ categories as “sectarian” is hard to define in law. Bringing flares and bottles into grounds is also to be prohibited.

Spectators would also not be allowed to possess alcohol in grounds within sight of the pitch between two hours before a game and one hour afterwards; it would also be banned on hired transport. A court could also ban a person from a football match for up to 10 years on conviction.

Sinn Féin’s John O’Dowd has questioned the need for new legislation as the worst behaviour is already against the law. He also considered the alcohol proposals too strict as well-behaved supporters should be able to enjoy a drink sensibly.

One of the more controversial points is a proposed ban on unauthorised pitch incursions, which many spectators see as overcautious. Sports bodies have restricted these celebrations by citing health and safety reasons. Barrister and GAA player Joe Brolly has pointed out that fencing to contain spectators is more likely to cause accidents than running spectators, as shown by the Hillsborough disaster.

Victims

Justice cannot be done without evidence but intimidated or vulnerable victims and witnesses are more reluctant to give that to the court. Some ‘special measures’ to protect them are already in place, including screens, video links, and video recordings of evidence-in-chief and cross-examinations.

In cases involving firearms, knives and other weapons, witnesses would be automatically eligible for special measures. Ultimately, a court will still have to determine whether special measures would improve the quality of evidence.

The Bill also proposes offender levies literally make the guilty party pay the victim for their offence; they are in use in England and Wales. The levy would generally increase according to how severe the offence was e.g. £5 for fixed penalties, £30 for immediate custodial sentences. Small deductions (£1 per week) could be made from prisoners’ earnings.

The Courts Service would collect the levy and deposit its proceeds, expected to be £500,000 per year, in a ‘victims of crime fund’. This would help to meet the needs of victims and witnesses, and fund support services.

Partnership

Crime reduction partnerships are proposed to integrate community safety partnerships and district policing partnerships.

This will be an early testing ground for community planning, while local government reform is delayed. The name itself is not particularly popular with most people preferring the word “safer” in the title. A majority of members should be elected representatives, according to the public consultation out earlier in the year.

John O’Dowd questioned “what this cosy, warm word partnership” means on the ground. “I sometimes get a sense that the PSNI in particular has mastered public relations so well that it can charm any audience, including DPPs and me,” he commented, adding that he felt “spindried” after meeting a senior police commander.

The number of partnerships was up for discussion. Jeffrey Donaldson claimed there was a “disconnect” between local government and the nine police districts, with commanders often unable to attend DPP meetings. He suggested one partnership per police district.

Tom Elliott questioned the purpose of DPPs, having chaired one, and suggested a return to police liaison committees attached to councils.

Efficiency

Not all offences need the full prosecution process, officials say, and prosecuting minor cases slows down the court system. “A day in court can have a sobering effect on people,” Maurice Morrow has commented. “If the system becomes very casual, it will not have the same impact on offenders.”

Three proposals are put forward, the first being an extension of fixed penalties. Police could issue these for ‘Friday night misbehaviour’ offences, including disorderly behaviour and criminal damage, petty shoplifting, and selling alcohol to under-18s. The normal penalty would be £40-£80, thought by some to be too low.

A prosecutorial fine is the second suggestion. At his or her discretion, a public prosecutor could offer a financial penalty, up to £200, as an alternative to prosecution. Financial compensation orders could be attached to these penalties, to make good on the damage caused.

Thirdly, conditional cautions could be used to penalise minor repeat offenders, again with conditions such as reparations. Offenders could still request a trial.

There are currently 21 magistrate’s court districts and seven county court districts, and Court Service officials see the current system as too rigid. They had considered aligning these with the new local council areas but this would be similarly rigid, so a single “territorial jurisdiction” for the whole province is therefore planned. This would allow business to move more flexibly between the lower courts e.g. listing a case at a more convenient venue for a victim or witness.

Public prosecutors could also be allowed to issue a summons without a lay magistrate’s signature, to save time, although some observers say this undermines the legal system’s checks and balances.

Legal aid

Around 80,000 people receive legal aid each year, with the bill costing £103 million last year. This outstrips the £65 million budget, which was raised to £85 million on devolution. Responsibility for legal aid is due to move from the Courts Service to the Department of Justice in April 2011.

Means-testing is suggested to contain criminal legal aid costs, down to a target of £79 million by 2013. There is already a means-test for civil legal aid. At present, legal aid is approved in 44 per cent of civil cases and 80 per cent of criminal cases where an application is made.

Wealthy offenders could also be required to pay back legal aid when convicted; this would apply also to people who recover financial assets through the courts. The graduated fees scheme (agendaNi issue 33, p.18-19) would also be introduced but the Bar Council has reservations, claiming that the scheme has eroded standards of advocacy in England and Wales. The Law Society concurs.

Other clauses may also require sex offenders to notify police of their location, without a court process, and allow solicitor advocates the same rights of audience as barristers in the higher courts. This is supported by the Law Society but opposed by the Bar Council. Magistrate’s courts would be allowed to deal with compassionate bail requests, with the crown court dealing with repeat bail applications; both proposals will free up time in the high court.

The Bill’s final content will be up to the Minister and published at its first stage in the Assembly.

The UK deficit

The combination of an underlying structural deficit plus the impact of actions to alleviate the financial crisis and the recession has brought about a serious deterioration in the UK’s fiscal position. By the spring of this year annual net UK public sector borrowing (the deficit) was projected to exceed 11 per cent of gross domestic product (GDP) while the underlying stock of debt was rising sharply towards a peak of almost 75 per cent of GDP or £1.4 trillion in 2014-2015.

The cost of servicing this debt would grow very rapidly if interest rates began to increase or the markets imposed a risk premium on UK borrowing. Faced with these threats a credible debt consolidation plan for the UK was needed urgently.

The Labour Government’s Budget 2010 in March 2010 aimed for a fiscal consolidation of £73 billion by 2014-2015. The Coalition Government’s emergency budget in June 2010 went much further adding an additional £40 billion of tightening by 2014-2015 and pushing total consolidation to £128 billion by 2015-2016. Table 1 shows how the fiscal consolidation has evolved.

Of the £128 billion of consolidation planned for 2015-2016, some £99 billion is expected to come from spending cuts and the rest from tax increases. The spending cuts include £11 billion of a contribution from the welfare budget.

Since the Coalition has pledged to maintain real spending on health and increase spending on overseas aid, the overall spending cuts imply real reductions of 25 per cent or more for other services.

The precise implications for Northern Ireland of these cuts in Whitehall departments will not be known until the spending review in October. However, since cuts in comparable English spending departments carry over to Northern Ireland via the Barnett formula, some rough estimates can be made. The formula gives Northern Ireland (and Scotland and Wales) a population share of changes in comparable English spending.

With health protected, this implies cuts of between 8-10 per cent in real terms for current expenditure in Northern Ireland by 2014-2015 and probably 25 per cent or more in capital expenditure. Thus by 2014-2015 the baseline for the public expenditure funded by the UK Exchequer and assigned to the Northern Ireland Executive (the so called assigned DEL)* could be down by £1.5 billion compared with its current figure**.

* DEL = departmental expenditure limit
** This is entirely consistent with estimates of a cut of £4.8 billion for Scottish public expenditure made by the Scottish Government over the same period.

Table 1: UK fiscal consolidation (£ billion)

Meanwhile back home

The assigned DEL is over 90 per cent of the Executive’s budget but there are other sources of income. Table 2 sets out what the Executive plans to spend in 2010- 2011 and how it is financed.

It is clear that losing over £1 billion of departmental spending would be a huge challenge for the Executive but unfortunately the pain doesn’t end there. In its short life the present Executive has managed to rack up some substantial bills for which there is no regular source of finance.

Some of these, such as free transport for the elderly and free prescriptions, have a modest though growing cost. Others, such as expenditure on water and sewerage (about £200 million per year), and freezing the regional rates have a much higher price tag.

Other commitments such as the Civil Service equal pay claim (£150 million) and possible support for the Presbyterian Mutual savers also represent an unfunded claim on resources. Taken alongside a decline in capital receipts from a depressed market these and other pressures forced a £367 million readjustment in 2010-2011 and the initial emergency UK in-year budget adjustment of £6 billion left the Executive with a further £128 million of cuts to find now or defer until next year.

Finally we should not overlook the budget significance of the transfer of policing and justice powers to the Executive. Although a baseline of £1.2 billion and a one-off package worth some £850 million transferred with this function it too will face cuts from the consolidation announced in the June 2010 emergency Budget. Past experience shows that any deterioration in the security situation tends to push law and order spending towards the top of the priority list, displacing other programmes in the process.

Table 2: Northern Ireland Budget 2010-2011 (£ million)

What can be done?

Facing cuts in the Executive’s budget which may take a decade or more to recover to its present level requires an urgent examination of what can be done to offset this loss. This section looks briefly at the options for self-help, some obvious and others more radical.

(a) Ending protection for spending

Every Minister will wish to have their expenditure protected in times of cut backs but there is no logical justification for blanket protection. All programmes have the potential to make savings and no area of spending should be immune from scrutiny. The local budget is dominated by health and education spending and it is simply not possible to absorb cuts of the magnitude envisaged while protecting these large programmes.

(b) Unfunded commitments

If the Executive is paying for measures that have no support through the Barnett formula then these should be examined urgently since the true cost is lower levels of service in other areas. Finding an alternative funding mechanism for the Water Service rather relying on public expenditure, for example, would release up to £200 million per year for other services.

(c) Universality of provision

There has been a growing trend to provide some services on a universal basis and at no user cost. Prescriptions are one example. This form of provision is wasteful and needs to be re-thought.

(d) Efficiency savings

Efficiency savings can make limited resources go further. However, having already found over £700 million of savings in the past three years there must be no illusion that efficiency savings alone can come near to closing the funding gap that now looms.

(e) Pay, employment and pensions

Public sector pay counts directly for half of public expenditure and much of the rest indirectly supports jobs so pay restraint is a legitimate issue for debate when the alternative is large scale loss of jobs.

Public sector pay in areas of devolved responsibility rests with the Executive but within the controls set by HM Treasury so in principle a policy of freezing or even cutting pay (as has happened in the Republic of Ireland) is possible.

However, this is a complex area and the scope for local action may be constrained by legal commitments. Adopting regional pay bargaining would mean disengaging from the national pay bodies and setting up new arrangements. It is by no means a quick fix for tackling the public expenditure crisis.

(f) Rationalisation of administration

Northern Ireland has a complex mix of administrative structures that are in urgent need of rationalisation to reduce duplication and waste. Unfortunately the main vehicles for delivering these changes such as the Review of Public Administration and the Education and Skills Authority have stalled because of political differences.

The prize is still there, however, including new rationalisations such as concentrating public sector research organisations that are scattered across departments into a new unified structure. In the face of a major public expenditure crisis it makes sense to re-start the process of rationalisation as soon as possible.

(g) The capital programme

Northern Ireland has embarked upon an ambitious investment strategy with a planned spend of £18 billion over ten years. However, this strategy was always conditional on funding being available and the depressed state of the market for asset sales and the very large reduction in conventional capital funds over the next four years means that the original strategy is unsustainable.

In addition, Northern Ireland has been a heavy user of the Private Finance Initiative (PFI) to deliver capital projects. In 2010-2011, over £940 million worth of deals had either been signed or were at preferred bidder stage. This is 11 per cent of the UK total for a region with 3 per cent of the UK population. Since the annual unitary payments on all of these deals come out of current expenditure which is set to contract sharply, PFI will become an increasingly onerous burden.

In view of the change in circumstances since it was originally conceived, a review of the Investment Strategy is clearly indicated with a view to adopting a more modest and sustainable programme.

(h) Raising local revenue

The principal revenue raising vehicle available to the Executive is the regional rate. However, the domestic rate has been frozen in money terms for three years so revenue from that source is not even keeping pace with inflation. The non-domestic rate has been frozen in real terms and a raft of reliefs or giveaways have undermined the tax base. As public services face unprecedented pressures, all of these revenue limiting measures will come under critical scrutiny.

Beyond the rates the Executive has little room to manoeuvre in generating additional revenue. Some imaginative ideas involving manipulating the MoT system and imposing a text levy on mobile phone operators have been floated but they need much further thought before any revenue would be forthcoming.

It is difficult not to conclude from this brief review that the Executive has relatively few means in the short term to offset the pain of cuts in its budget. Perhaps it is time to consider if there is another way to tackle the problem through a deal with the Coalition Government.

Can a deal be done?

A straightforward plea to be excused the forthcoming cuts will be most unlikely to succeed. There are many areas of the UK that are as poor if not poorer than Northern Ireland so we are not in that sense a unique case.

However, there are two factors that might be woven into a compelling argument for distinct treatment. The first of these is the weakness of the private sector. While the region will take a 3 per cent population share of cuts the local private sector accounts for probably less than 2 per cent of UK output, which is well down the regional scale. Thus the ability of the private sector to expand rapidly to take up the slack from public sector cuts is very problematic unless it gets a helping hand.

This is where the second part of the argument comes in. Both the Secretary of State and the Prime Minister have declared that they wish to see Northern Ireland turn into an ‘enterprise zone’ but so far no tangible ideas beyond the possibility of a reduced rate of corporation tax have emerged to give effect to this desire.

The outline of a deal might therefore be as follows:

• The budget cuts for Northern Ireland to be limited to 2 per cent (the output share) rather than 3 per cent (the Barnett share) of cuts in comparable English programmes;
• The savings (perhaps £500 million per year by 2014-2015) to be held in a ring-fenced pot to support new measures to promote enterprise and private sector growth in the region. The Executive would accept the loss of autonomy over this money so that there would be no leakage back to supporting social programmes. This would be very similar to the arrangements put in place for financing the European Union Peace and Reconciliation Programme.
• A partnership arrangement between the Secretary of State and the Executive to oversee the disbursement of funds from the new fund.

Victor Hewitt is Director of the Economic Research Institute of Northern Ireland.

While Stormont is Northern Ireland’s formal political arena, constituency offices are very much the front-line for MLAs where the people they represent get in touch with their problems and questions. Barry McElduff (West Tyrone), David McClarty (East Londonderry) and Alasdair McDonnell (South Belfast) shared some of their thoughts on what this part of their job involves.

All three agree on the importance of having good staff, both welcoming and competent. “I am fortunate to have an empathetic and confidential team who recognise that the smallest of issues can have a significant impact on an individual constituent’s life, and who treat each enquiry with due care and attention,” says McClarty.

Town centre locations also proved useful to him and McElduff, while McDonnell’s two centres are located on or near major roads through South Belfast.

A wide variety of queries come across their desks. Rural residents, agendaNi understands, tend to bring fewer but more diverse cases than their urban neighbours.

At present, McDonnell’s caseload features housing shortages and repairs, controversial planning applications, antisocial behaviour, immigration, Health Service waiting lists, the education crisis and restricted lending from banks.

Irish passports are a common query for McElduff, especially when people find theirs is out of date just before going on holiday. Advice on rural planning is frequently sought and parents of special needs children would ask him for help to find a classroom assistant.

“If I wanted something fascinating to read on a train I would take the office diary with me because in it there are lots of people’s concerns,” he remarks. The impact of second homes and noise from students are frequent complaints on the North Coast.

McClarty usually receives queries by phone from visitors to the office although people often approach him and his staff when they are out and about.

McElduff finds the same, whether buying a paper, during half-time at a Gaelic match or when he is ordering a Chinese takeaway. Most people phone but he also receives queries through twitter, facebook and from councillors. Regular door-todoor canvassing alerts McDonnell to cases. He also publishes a newsletter three times per year and an annual Westminster report to keep constituents informed.

The different levels of government can confuse people, with McDonnell finding that a “vast number of enquiries” are council-related.

Many people, according to McClarty, have a “misperception that we can deal with absolutely anything” and he does his best to find out who can help them.

“But it is important to reinforce that the work done in the Assembly does directly impact on the lives of everyone in Northern Ireland,” he continues. Stormont is now responsible for most areas affecting everyday life except tax, social security, defence and foreign policy.

Constituency queries can be translated into questions to departments, material for debates and committee scrutiny, and they also influence party policy.

Unusual cases range from the trivial to the serious. The Compensation Agency refused to pay compensation to an East Londonderry man’s family after his violent death, as he had been known to the police. Eastern European tenants regularly visit McClarty’s office, sometimes with problems with their landlords.

McElduff has been seen as “a lawyer, a social worker or a law enforcer” but is also asked to compere at various events. A boxing tournament was one recent example; forthcoming ones include a Mr and Mrs competition, in Dublin, and Strictly Come Dancing, in Armagh.

“I was recently contacted by a constituent and asked to assist in finding a home for a roaming goat which was causing untold damage to gardens and flowers in a street in South Belfast,” McDonnell relates. “I can confirm the goat is safe and well and has found a happy home.”

A smaller Assembly is on the way due to plans for fewer constituencies. Political reasons in Britain are driving the change, to take effect after the next general election. MLAs and MPs share the same areas.

Conservatives have long complained that many Labour seats are too small and easily won. Some of the smallest seats, by electorate, are clustered in the Welsh valleys, inner city London and Merseyside. These were set up during the Industrial Revolution to represent growing cities and mining areas, but their populations have since declined.

Northern Ireland’s number of seats was 13 in 1922, then 12 from 1950, before going up to 17 in 1983 and 18 in 1997. At present, the Commons has 650 MPs, split as follows:

The coalition’s Parliamentary Voting System and Constituencies Bill proposes a cut to 600 constituencies; its second reading is on 6 September. Proportionally by population, that number would be shared out as follows:

This analysis uses rounded numbers, making up a total of 599. However, Scotland is guaranteed two small seats, to cover the remote Western Isles, and Orkney and Shetland. If that tally went up to 52, Northern Ireland could be squeezed down to 16 or 15.

Sir Reg Empey has predicted that any reduction may see a Belfast constituency abolished, due to their smaller size. Each one currently has 52,000 to 53,000 voters. At the May general election, the smallest in Northern Ireland was Belfast South (52,218) with Antrim North being the largest (73,938).

Until now, the ‘cut the Assembly’ debate has focused on the number of seats per constituency, assuming that the number of constituencies stays at 18, as shown below:

Fewer seats will even out differences in population and save some money; the standard MLA’s salary is £43,101 while MPs earn £65,738. However, representation would be less local with each member expected to do more constituency work. Smaller parties may lose out.

Dropping the number of constituencies, though, means a gentler decrease. Assuming six MLAs per seat, this trend appears:

The DUP supports keeping 18 constituencies but having three or four MLAs per seat. Ulster Unionists and Alliance also support a smaller Assembly. The UUP sees a constituency cut as “inevitable” and seeks a “fair and equitable” outcome.

Sinn Féin is “not opposed” to looking at a constituency cut but says the Assembly’s large size is necessary to ensure the “broadest spectrum” of opinion. The SDLP has no set figures in mind but would examine proposals for “fairness, balance and equality of representation.”

The Greens, meanwhile, are calling for an independent commission to decide the number of constituencies and MLAs, as the review of local government showed that “party political interests can interfere with providing the best possible public service.”

The eventual end to the Barnett formula and a strong precedent for tax-raising powers will be the main results of the Coalition Government’s plans to give Scotland more autonomy. A think tank on Scottish devolution, the Calman Commission, will see its recommendations put into law over the next year.

In future, Northern Ireland would receive grant funding from Westminster only because of its needs, which are yet to be assessed. Extra powers for Holyrood, over taxes and elections, could also lead to calls for Stormont to follow suit.

Scotland has the most established devolved system in the UK and is usually seen as more advanced than Northern Ireland. In particular, the Scottish Parliament can vary the basic income tax rate by 3 per cent, and justice has been devolved since the start.

It is also nearly three times larger than Northern Ireland in population (5.2 million to 1.8 million) and in its set budget (£28.9 million to £11 billion).

Powers

The Northern Ireland Assembly, though, controls some policy areas which Scotland does not.

Some of these differences are down to practical reasons e.g. to ensure the same safety standards on all of Great Britain’s roads. Strategically, the UK Government did not want to lose its North Sea oil revenues. The province is also traditionally seen as a ‘place apart’ which needs its own separate laws and services.

The Scottish independence debate (agendaNi issue 33, p.112-114) is now effectively suspended due to the more pressing financial problems. In response, the pro-union parties – i.e. Labour, the Lib Dems and Tories – had set up a commission led by Sir Kenneth Calman, a former chief medical officer, to look at how devolution could be improved.

This commission started work in April 2008 and reported in June 2009, with an enthusiastic welcome from its backers. It recommended that the Scottish Parliament should have power over:

• Administering its own elections;
• Funding animal health policy;
• Regulating airguns; and
• Setting drink drive limits and speed limits;

In general, though, the Scottish split between devolved and reserved powers was “well-drawn at present”. More radical proposals to devolve energy and drug laws were rejected.

Respect

Calman’s main thrust was better cooperation between the devolved and Westminster levels of government. “Mutual respect” should be the guiding principle.

To this end, he called on the Scottish Secretary to outline the Queen’s Speech to MSPs, which Michael Moore did on 17 June. David Cameron, who paid a visit on 14 May, has also offered to visit Holyrood annually in keeping with his manifesto.

The UK Parliament, the commission said, should also be free to discuss devolved matters and hold a regular “state of Scotland” debate. A joint liaison committee could also be set up.

MSPs (and MLAs) are often asked to vote on legislative consent motions, so that one of the UK Parliament’s Bills can extend to their region. However, the detail of the Bill sometimes changes significantly after that motion is agreed. More detailed communication was needed on these changes.

The Joint Ministerial Committee should include formal meetings between finance ministers from all parts of the UK. The JMC also needed to be more open, publishing its agendas and an annual report. In Europe, Scottish ministers should be included in UK delegations when devolved matters are discussed.

Finance

His main findings on finance were to replace the Barnett formula with a needsbased alternative, and allowing the Scottish Parliament to raise more of its own funds. The overall aim is to improve that Parliament’s financial accountability, rather than spending money raised by others.

Current tax-varying powers could add or subtract up to £1 billion from the Scottish budget; this has never been tested.

In the commission’s view, the UK Government should cut all Scottish income tax rates, and the block grant, by 10 per cent and allow MSPs to set their own rate. The resulting fiscal gap could then be filled or even exceeded, resulting in “over a third” of devolved current spending being funded within Scotland.

Four other taxes would also be subject to the same principle:

• Aggregates levy;
• Air passenger duty.
• Landfill tax; and
• Stamp duty on property transactions.

Grant funding from Westminster would continue, to ensure proper welfare services for all UK citizens e.g. the NHS, social security. However, grant money could only be justified according to need, and a UK-wide assessment of that would be required.

Until this assessment was carried out, the Barnett formula could continue although it would have to be adapted to allow for any devolved taxes.

At present, the Scottish Parliament can borrow money from the Treasury to fill short-term gaps in its cash flow. More borrowing powers are recommended, to fund capital spending projects. Northern Ireland already has greater borrowing powers – up to £200 million per annum.

Some variations in VAT and fuel duty could be considered when the new system has settled down. Devolved taxes would still be collected by HM Revenue and Customs.

Both regions’ budgets are comparable, although Northern Ireland has its own social security fund. The Scottish Government has chosen to defer its share of spending cuts (initially £332 million) to 2011-2012.

Short of independence, the SNP wants full fiscal autonomy with all Scottish revenues raised in Scotland. A remittance would then be sent to the Treasury to pay for UK-wide services. This has been done before in Northern Ireland, as the old Stormont Government paid for ‘imperial services’ (e.g. farm subsidies). However, most taxes were still collected by the UK Government.

Relevance

Strongly backed by the Coalition Government, the Calman report is to be implemented through a new Scotland Bill, which is now being drafted. This is due to be published in the autumn and Parliament returns from its summer recess on 6 September.

Any fiscal changes would automatically affect Scotland’s tax-payers and their families, including around 33,000 people from Northern Ireland who live there. Increased pressure for tax devolution in Northern Ireland can also be expected, although the Treasury is only researching the potential for corporation tax.

Calman’s plans would also give Scotland an edge over Northern Ireland in running its own devolved elections. Both regions go to the polls on 5 May 2011.

All of his ideas on co-operation could, in theory, be copied in Northern Ireland, although they would need the Assembly’s backing.

There are no plans to make the devolution settlements consistent. Indeed, the UK Government admits and accepts that devolution is ‘asymmetrical’ and therefore different in each country. Northern Ireland has not had a similar review of its settlement; Stormont only received its full powers in April 2010 when justice was transferred.

Barnett would continue until a replacement is found. The UK-wide needs assessment would, crucially, then decide whether Northern Ireland is underfunded or over-funded. The province would no longer be guaranteed funding as it was in the past.

Sir Reg Empey’s five years as UUP leader in review.

“A mammoth task” admittedly awaited Reg Empey on 25 June 2005 as he took on the UUP leadership but, he continued, “we have faced great adversity before and we will meet the challenge.” Early days saw him trying to stabilize the party after its defeat. Relative political isolation worked to its advantage as he re- organised outdated structures and promoted younger members.

However, a voting pact with the PUP in 2006 proved unpopular with Sylvia Hermon openly opposing the plan. Empey had wanted to bring loyalists into the mainstream and gain an extra unionist minister.

The 2007 Assembly poll saw a levelling out of the party’s vote, down to 103,145 from 127,414 two years previously, and the loss of nine seats. He has kept the UUP in government despite some internal calls for the party to go into opposition. Overall, though, his leadership ran quietly with satisfaction drawn from winning the Dromore by-election in the following February.

With the surprise announcement of the Conservative pact in July 2008, the whirlwind started. The DUP was rattled by the prospect of losing its hardliners to Jim Allister and moderates to both Empey and Cameron. That December was a high point with David Cameron addressing UUP conference delegates in Belfast. Members were sensing a revival after the years of the underdog. Frontbench Tories were more than willing to visit, campaign and even learn from being in government. In return, Conservative and Unionist MPs had the chance of entering a British Government, if elected.

Hopes rose with Jim Nicholson’s re- election but the result was more complex than beating the DUP. Nicholson was an incumbent who gained fewer first preferences (82,893) than before, and the DUP did get more votes in the popular poll.

A large section of unionism was still outside the fold, either more conservative than the Conservatives or opposing from the left. The party straddles both those wings and the enthusiasts for the pact, who saw it as normalisation. Unease grew with the deepening deficit and the Tory drive for spending cuts, with obvious consequences for Northern Ireland. Hermon’s departure left her former colleagues vulnerable.

Voting against justice devolution showed a new assertiveness on the UUP’s part, but the New Force’s Westminster campaign faltered over late candidate selections and Cameron’s comments on public spending. All the stops were pulled out, the peak being the potential PM’s visit to Belfast 36 hours before polling day. Running for South Antrim, Empey wanted to take personal responsibility for the pact and came just under 1,183 votes from winning.

Northern Ireland again woke up “semi- detached” on 7 May, with the pact yielding 102,361 votes but no seats.

His resignation was the natural consequence of the pact’s failure but it marks the end of an eventful leadership where Empey was not afraid to take risks. UUP support has fallen by around 25,000 since 2005, but it could easily have fallen further. Respected for his patience, courtesy and loyalty to the party, he can claim credit for its modernisation and for taking them on a political journey which saw one of the more imaginative ideas in the province’s recent political history.

Street litter control notices could soon be issued to businesses – for example street vendors – to force them to clean up after themselves. Owners of land that is defaced with litter could also face litter clearing notices and anyone who fails to provide their name and address could receive a fine of up to £1,000, if the Bill is passed.

The money spent by councils on fishing shopping trolleys out of rivers will become the financial responsibility of the shop from which the trolley was stolen.

The Bill will only allow charitable, religious and political groups to distribute flyers, handouts and pamphlets because these can end up as litter, especially if they are left under windscreen wipers.

Environment Minister Edwin Poots told the Assembly that when the offences contained in the Bill are looked at in isolation they may seem “trivial”, but collectively they are real problems.

The Bill is based on the English and Welsh Act of the same name that was implemented in 2005. Its aims are to give district councils additional powers to deal with waste, reduce anti-social behaviour and cut the “massive” street cleaning costs councils currently have to pay. Importantly, district councils will have the power to enforce fixed penalty notices for most offences and the revenue from these will return to local authorities. It is for this reason the environment department predicts that the Bill will be cost-neutral.

According to Poots, “a staggering £34 million” was spent on street cleansing in Northern Ireland last year. That amounts to almost £100,000 every day that could be spent on other important council services, he said.

In addition, if a case goes to court under the 2003 Pollution Prevention and Control Regulations Act, the maximum fine for a summary conviction (e.g. failing to have a permit to operate an installation or mobile plant) will increase from £30,000 to £50,000.

An addition to the 1993 Roads (Northern Ireland) Order would give councils the power to make a gating order to restrict public access to a road. This order is currently granted by the Roads Service. The council will only be able to issue the gating order with permission from the DRD and if crime and antisocial behaviour is affecting businesses and residents on the road.

At the moment, residents have to approach the Roads Service for a gating order. They also have to pay approximately £3,000 for the gates, plus the costs of locks, keys, third party liability insurance (to a minimum value of £5 million), and maintenance. Councils will now take on this responsibility.

Two new vehicle offences have been created. People who leave two or more cars parked on the road for sale or those who repair a vehicle on the road as part of a business will be prosecuted. The Bill will also give district councils the power to remove abandoned cars from the streets immediately rather than putting a notice on them first.

Welcoming this development the UUP’s Roy Beggs Junior said that in his experience “when it became known that the statutory authorities were about to lift a car, it was deliberately set on fire in the middle of a residential area.”

Fixed penalty notices will be given to graffiti and fly-posting offenders and council officers will serve defacement removal notices in respect of these offences. The Bill will also make it an offence to sell spray paints to children.

Patsy McGlone urged the committee to be careful when dealing with the removal of racist graffiti saying: “It would be extremely perverse if, as a consequence of the legislation, people could be held liable for the removal of graffiti that was designed to be deliberately antagonistic towards them.”

Irresponsible dog ownership continues to be a problem in Northern Ireland therefore the Bill will allow for councils to issue fixed penalty notices for dog fouling, ban dogs from designated areas, require dogs to be kept on a lead, and restrict the number of dogs that can be walked by one person.

The Assembly’s Waste Bill gives councils and the DoE equal powers to act against illegal dumpers and strengthens the law on contaminating land, including underground water.

The Waste and Contaminated Land (Amendment) Bill is designed to strengthen the law on the subjects mentioned in its title and also bring about a “partnership approach” between the Department of the Environment and local government when tackling illegal waste.

As the title indicates, the Bill amends also two existing laws, mostly the Waste and Contaminated Land (Northern Ireland) Order 1997 but also the Producer Responsibility Obligations (Northern Ireland) Order 1998.

A public consultation last year found broad support for the Bill’s proposed content; most of those responding were councils or groups representing councils.

Fixed penalties are proposed as an option to punish less serious waste offences, rather than taking the defendant to court. These can be issued by DoE or council officials but they are discretionary; the power to prosecute through the courts still remains. Councils can use funds from these fixed penalties to cover the costs of enforcing waste law and cleaning up illegally dumped waste.

The department’s enforcement officers can also seize vehicles and other property which they suspect are being used in the illegal waste trade. Extra legislation is needed to put these powers into practice and also explain how the DoE will deal with seized property. Appeals could be made in a magistrates’ court.

Councils already have the power to serve notices which require occupiers or owners of land to remove illegal waste or take action to remedy the problem. The Bill gives the department the same power and also allows notices to be served on people suspected of illegal dumping. Conversely, the councils will have the same powers as the department to deal with illegal dumping, from fly-tipping to serious criminal offences.

At present, enforcement officers have to give 24 hours’ notice before they can enter residential premises or bring heavy machinery onto premises. However, this will be made easier with officers needing simply a court warrant or permission from the occupier. The definition of contaminated land is changed to include water in the underground strata of soil.

More prosecutions are expected to result after the Bill becomes law, which will incur some cost, but the fixed penalties can also help recover costs.

Opening the 13 April debate, Edwin Poots said he saw the Bill as a “crucial component in our efforts to manage waste”. He added that a fly-tipping protocol, explaining the roles and responsibilities of the DoE and councils, will be put in place before the legislation commences.

Environment Committee Chair Cathal Boylan said the Bill would help meet EU landfill targets and also make the province a “safer, healthier and more environmentally friendly” place to live. He warned that the DoE had planned to remove the Water Order 1999, which could make water pollution harder to prove, but this plan had been withdrawn.

Danny Kinahan commented that a litter prosecution resulting in an £80 fine could cost almost £1,000. Dolores Kelly wanted larger fines as a better deterrent. Members repeatedly referred to Northern Ireland’s natural beauty.

Accurate statistics on fly-tipping were needed before a protocol was produced, Poots confirmed. He added that it costs approximately £100,000 a day to clean up after litterers. The Bill passed without a vote and the Environment Committee took evidence on it up to 28 May. It is due to report back to the Assembly by 5 November.

Usually, a politician will not resign and force a by-election if they cross the floor or become an independent. In light of this, Meadhbh Monahan asks elected representatives about their duty to their constituents.

The question of whether a politician should resign invariably arises if they leave the party in whose name they were elected. Winston Churchill was the most famous parliamentarian to cross the floor, and he did it twice, from the Conservatives to the Liberals in 1904 and back again in the 1920s.

More recent UK defectors include former Northern Ireland Secretary Shaun Woodward and Quentin Davies, who both left the Conservatives and joined Labour.

Woodward was sacked from his front bench role as London Spokesman in 1999 because he opposed a party motion. He then moved to the Labour backbenches and contested St Helen’s South, a safe Labour seat at the next election. David Cameron went on to win Woodward’s former Witney seat.

Davies defected to the Labour Party in 2007 amid calls from his constituents for him to resign his Grantham and Stamford

seat because they had elected a Tory, not a Labour MP. He did not stand again in 2010 and Davies has since been appointed as a Labour peer.

Lady Sylvia Hermon left the UUP and became an independent MP for North Down just six weeks before the Westminster election and her constituents supported her with 21,181 votes, a 63.3 per cent share. Jeffrey Donaldson, MP for Lagan Valley, left the UUP in December 2003 and joined the DUP in January 2004.

Since the Assembly was established in 1998, seven MLAs have become independents (three from Sinn Féin) and seven unionist MLAs have crossed the floor.

Roger Hutchinson changed party three times during the 1998-2003 Assembly; from UK Unionist to Northern Ireland Unionist; then to independent unionist and finally to the DUP in 2002.

In June, former Justice Secretary Jack Straw wrote in the House magazine that “the prime task of any MP, of whatever party, is to represent their constituents. It is they who elected us, they who are our employers, they who’ll decide in a few years time whether we can have our jobs back.”

This applies to MLAs too, as the Northern Ireland Assembly code of conduct says: “Members have a special duty to their constituents and are responsible to the electorate who are the final arbiter of their conduct as public representatives.”

In South Africa, where a closed list voting system is used, floor crossing was abolished in January 2009 following seven years of politicians changing parties and taking their seats with them during a 15-day period in September.

In his paper ‘The morality of members of Parliament crossing the floor’, William Leong, a Malaysian MP, wrote that in first past the post elections “voters in each constituency elect an individual candidate [therefore] the individual MP and not the party holds the seat and the MP can cross the floor and still keep his seat.” Leong continued that when proportional representation is used, “the seat belongs to the party and the MP who crosses the floor cannot keep his seat.”

agendaNi asked a number of floor-crossers and independents whether they considered resigning their seat and to explain their duty to their constituents.

Alan McFarland MLA
North Down
UUP > Independent (March 2010)

My contention, having stood as an Ulster Unionist is that I am still an Ulster Unionist. What happened was my party left me to become Conservatives.

My priorities towards my constituents haven’t changed. I’m still providing the same services. If I had stood down, there would be the scenario that the Ulster Unionists would have replaced me with someone who is not elected.

Given that it is within 12 months of an election I felt it was quite in order for me to hold on. If I stand again at the next election, [my constituents] will have the opportunity to decide if they want my representation.

I am still looking at the whole issue of where unionism is going and my position within that.

Dawn Purvis MLA
East Belfast
PUP > Independent (June 2010)

Generally speaking I believe by- elections are expensive, placing an unnecessary burden on the taxpayer. They should be avoided where possible. An elected official is elected for a set period and can be voted out at the end of that cycle if they made decisions during it which their voters disliked.

The Assembly voting system, which elects six MLAs for each constituency under a single transferable vote system, also means electing just one of those in a by- election would neither make sense nor be accurate. In Northern Ireland, unlike Wales and Israel, we elect individuals not parties.

Crossing the floor is an issue completely dependent on the circumstances. In my view it comes down to policy. If an elected official changes to a party which also changes the policies under which they were elected then those who voted for them may feel short- changed and want to remove them from office.

In my case I became an independent. However, I maintain the policies and principles under which I was elected and will continue to represent all of those people who come to me for assistance – the only thing that has changed in my case is the label.

Jeffrey Donaldson MP
Lagan Valley
UUP > DUP (December 2003/ January 2004)

Given that general elections occur every four to five years, I do not believe it is necessary for an MP who changes party midstream to have to step down from his or her seat and call a by-election. Parliamentary by- elections can be very expensive and turnout at such by␣elections is lower than at a general election. Consequently, it is my opinion that an MP who changes parties during a Parliament is then able to put themselves before the electorate at the following general election to seek a fresh mandate for their new position.

The same arguments apply also to MPs who leave a party and become an independent. The nature of our parliamentary democracy is such that when politicians switch party or change their policy, they are then held to account by the electorate at the ensuing general election.

Increasingly, constituents are looking for strong elected representatives who are not afraid to speak their personal opinion on matters of key interest to the people that they represent. More often these days, people vote as much for the individual who is the candidate as they do for the political party that they are a member of.