Posted on Saturday 9 April 2011 by Ulster Business

Northern Ireland Assembly

Parliamentary copyright images are reproduced with the permission of Northern Ireland Assembly Commission

Gary McKeown from Northern Ireland lobbying and public affairs specialists Stratagem outlines some of the key issues that will face the new Stormont Executive after the Assembly elections

It is no secret that the incoming Executive will have a massive job to do when it meets after the forthcoming Assembly election. While parties will be vying to secure as many seats as possible in the Chamber, it's fair to say that success this time around will be a double-edged sword as it will carry with it a particularly heavy burden of responsibility. That said, after four of years of (almost) plain sailing for the devolved administration, with most of the mutual suspicions of the past now gone, our politicians should have the space to deal with the everyday issues that governments elsewhere in Western Europe do as routine. Key among the challenges for the new Ministers will be realigning the Northern Ireland economy to make the most of the normalised situation here, respond to the new global economic realities and adapt to the continued attractiveness of a southern economy which boasts a highly-skilled workforce and low tax rate, notwithstanding the expiry of the Celtic Tiger. As an opening gambit, ahead of the Assembly election, the UK Treasury has published a paper entitled ‘Rebalancing the Northern Ireland economy.' The document sets out the possibility of devolving further powers to the Assembly to enable it to set its own corporation tax rate, something which currently lies within the remit of the Westminster Parliament. Northern Ireland's rate is currently the same as the rest of the UK at 28 per cent, and although this is set to fall, it will remain significantly higher than the 12.5 per cent rate on offer across the border in the Republic of Ireland. Politicians here have been arguing that a special case should be made for Northern Ireland to help it compete given its land border with the Republic, the dependence on public sector employment and the adverse economic legacy of the Troubles. However, should the UK government be minded to grant our politicians power in this field, it won't be a carte blanche. Any drop in the corporation tax rate would have to be paid for by a cut to the tune of up to £300m per year in the block grant allocated to Northern Ireland by Westminster. This means that the Executive will need to ensure it puts in place a pretty robust strategy to attract inward investment should it choose this course of action. The broader aspect of this challenge, or opportunity, spans the responsibilities of a range of Departments from Enterprise, Trade and Investment (attracting business to Northern Ireland and creating positive conditions for companies) to Employment and Learning (creating a workforce which is placed right where it needs to be to meet the needs of international corporations, whether in the fields of IT, bio-research or engineering).
"With most of the mutual suspicions of the past now gone, our politicians should have the space to deal with the everyday issues that governments elsewhere in Western Europe do as routine."
Currently the GVA per capita here remains significantly lower than that of the rest of the UK. In 2009 it was £15,800, whereas in England it was £20,400. There is a range of issues contributing to this, all of which the Executive will have to tackle, including low levels of GDP per employed person and high rates of economic inactivity. Slashing taxes to attract foreign companies won't address these fundamental issues which will need dealt with head-on if we are to stand a realistic chance of truly boosting the economy here. Of course, it isn't just economic issues that the new administration will have to grapple with. There are the proverbial elephants in the room, including the school transfer saga, the ongoing challenges within Health and Social Services, not to mention the sad fact that sectarianism is still a scourge. The transfer test, which has been an issue for successive administrations since devolution returned after the Agreement, has yet to be resolved to the satisfaction of all the main parties. It provides a case-in-point of how, although the parties are perhaps working together better than at any time since devolution, there are still underlying issues of deep division that the mandatory nature of our coalition government can only do so much to resolve. While Education Minister Caitríona Ruane did technically follow-through on her party's commitment to abolish the eleven-plus, the state-provided version has been replaced with a raft of private models put in place by those second-level schools which still wish to have academic selection at their disposal. No doubt if one of the unionist parties finds itself with the Education portfolio, we could see further changes to the transfer system. Of course, how permanent those alterations would be is impossible to tell as no consensus between politicians appears to be on the horizon. There are also longer term challenges which the incoming Executive will have to play its part in handling, such as the impact of an ageing society and the effect this has on public services and government expenditure, promoting public health with a view to improving on areas such as obesity and smoking, and dealing with energy issues, particularly with the price of oil continuing to rise and the ever-present problem of energy security lurking in the background. So, we have come through four years of devolved government since the DUP and Sinn Féin agreed to enter coalition, and while the public will have afforded them a period of grace to get used to working together, after this election there will be a much higher expectation on the Executive to deliver, whatever the result. Things have changed completely since the last time Northern Ireland went to the polls to choose its MLAs, with the global recession, the crash of the southern economy and a sustained period of stable government here arguably for the first time. These realities should be grasped by the incoming Executive as opportunities to position Northern Ireland as an innovative, appealing and bankable place to invest in. And as a result, jobs, economic growth and community relations will flourish.


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