Tom Griffin (London, The Green Ribbon): Sir David Varney "ain't no sanity clause," according to the BBC's Mark Devenport. After knocking back Northern Ireland's demand for a corporation tax cut in December, the former HMRC chairman has delivered his own recommendations for improving the North's competitiveness.
Varney's message this time will be even less palatable. He argues that public sector pay levels linked to those in Britain are too high for the local labour market. He also suggests that UK-wide benefit levels are potentially a disincentive to work given the North's lower average wage.
These harsh prescriptions are driven by some grim statistics. Public expenditure accounts for 67 per cent of gross value added in the North, compared with 45 per cent in the UK as a whole and 35 per cent in Ireland. Moreover, that public sector spends £7 billion a year more than is raised locally in taxation.
In the Irish Times last week, economist John Bradley questioned whether the North's politicians have the will to address the situation:
In the South, faced by crisis situations, we have taken dramatic steps when necessary. After 1958 we abandoned tariff protection and embraced the global economy. In the middle of the 1980s we slashed public expenditure and designed social partnership institutions that permitted a radical re-orientation of the economy towards renewed growth.
The problem in the North is that there is no comparable sense of economic crisis. While Northern economic circumstances are not ideal, neither are they all that bad. The "do nothing" option would perpetuate massive dependency on the British exchequer, but would also guarantee a standard of living that is still - surprisingly - probably higher than enjoyed here in the South. As we in the South face into the threat of global recession, such automatic fiscal support is enviable!
The 'do nothing' option is not without its own dangers. The post-devolution era has brought much closer scrutiny of relative public spending levels in the different UK nations. Varney's tough stance may be a reflection of that fact.
