Opinion

Newton Emerson: The problem with Karen Bradley's budget is that it is a bit too good

Newton Emerson

Newton Emerson

Newton Emerson writes a twice-weekly column for The Irish News and is a regular commentator on current affairs on radio and television.

Secretary of State Karen Bradley arriving at Downing Street earlier this month. Picture by Stefan Rousseau, Press Association
Secretary of State Karen Bradley arriving at Downing Street earlier this month. Picture by Stefan Rousseau, Press Association Secretary of State Karen Bradley arriving at Downing Street earlier this month. Picture by Stefan Rousseau, Press Association

Imposing an indirect rule budget on Northern Ireland is somewhat complicated by the need to pretend direct rule has not arrived.

The process that has evolved since Stormont collapsed is for the secretary of state to set a draft budget at the start of the financial year in March, let civil servants shuffle unspent funds between departments in June and October - the so-called monitoring rounds, meant to be performed by devolved ministers - then wrap it all up in a Budget Act passed at Westminster towards the end of the year, in a post hoc attempt to keep everyone’s nose clean.

Secretary of state Karen Bradley has just published the third such draft budget, earning what now look like only token protests.

Stormont parties have complained the consultation exercise was a sham. However, consultation exercises are always a sham.

Business groups have complained they will not receive the rates exemptions available in Britain and which Stormont had been discussing. They would have had more opportunities to lobby for this under devolution. However, lobbying of the DUP-Sinn Féin carve-up was always a mixed blessing.

Overall, the main criticism that can be levelled at indirect budgeting - apart from its democratic deficit - is that it is ad hoc year by year, as opposed to the five-year budgets the executive should set at the start of each mandate.

This means there is no long-term or even medium-term strategic planning. However, the last executive collapsed nine months into its mandate without agreeing a budget, so we are no worse off than we were.

The suspicion we are better off is the real political problem, certainly to hopes of restoring devolution.

Announcing her budget, Bradley warned of pain and insisted devolution must return. Yet her draft is fine, even good, and too plausibly an improvement on anything our elected representatives might have produced.

Its £11.3 billion package is a 2 per cent above-inflation increase on last year.

Real health spending will rise by 4 per cent, excluding the impact of monitoring rounds.

There is a £130 million raid on investment to cover day-to-day spending. However, this is more than made up for by another £330m from the DUP’s confidence and supply agreement, almost all of it earmarked for infrastructure. The DUP also secured an extra £140m for day-to-day spending above the block grant formula by somehow putting the squeeze on Number 10. In a tellingly circular statement, Bradley said this will “support the delivery of financially stable public finances”.

The confidence and supply funding includes £100m for health transformation, an urgently required task that devolved ministers have proved incapable of delivering.

The 2016 Bengoa Report had been dropped down the back of a Stormont radiator, like the three previous reports on health reform commissioned by the executive, because our parish pump politicians cannot face the reality of having to close small hospitals and centralise acute care.

The far greater prospect of civil servants getting on with it on their own is another test of any democrat’s commitment to devolution.

Perhaps the most interesting aspect of the latest budget is the 5 per cent hike in the domestic regional rate. As Stormont only sets half the rates, with councils setting the remainder, this will add 2.5 per cent to household bills, equivalent to 0.5 per cent above inflation.

Even that is enough for Sinn Féin to have protested, while the DUP claims it stopped the Treasury setting a 10 per cent increase, which would have meant a 3 per cent real rise in domestic bills.

Why would that have been a bad thing? From 2006, predictably under the last period of direct rule, Northern Ireland switched the basis of its domestic rating system to individual property values. This made it one the most progressive taxes in the UK and Ireland. It still catches too many low-income people at one end and ignores too much high-value property at the other but in general it is looked on with envy by economists and policy-makers in England. It is also Stormont’s only serious tax-raising power, yet it has never contributed to more than 5 per cent of its budget.

There would be no better and more accountable way to boost health and education spending, in accordance with the stated policies and priorities of all our parties.

The fact that a devolved executive never did so, and in fact made a virtue of never doing so, is one more reason it is a struggle to hope it returns.

newton@irishnews.com