Stakeholder

As the business community in Northern Ireland gears up to tackle whatever 2010 will bring it is more important than ever that the political structures locally act in partnership with the private sector as well as wider community to deliver as prosperous a society as possible. Unfortunately the ragbag of  ‘end of year statements’ from various political players paint a disjointed picture. When UUP leader Sir Reg Empey says the Stormont regime is “irrelevant and distant from the everyday worries and concerns of families struggling to survive with increasing unemployment and economic uncertainty”, can he really be describing the same body which Peter Robinson says has “greatly improved the situation for our community and voluntary sector as well as businesses and householders?” Unfortunately as we head towards a likely May election date the business of politics is more rather than less likely to be characterised by disharmony and strained relations.

That is a pity because the Executive I feel has two main challenges in the year ahead, one positive and one negative. On the negative side the indications are already in place that cutbacks in public spending are going to be sustained and severe. Although Sammy Wilson recently expressed some relief that the NI block grant had not been badly hit in the Comprehensive Spending Review a new UK Government will soon test that theory. Already the Business Secretary Peter Mandleson slipped in a pre Christmas announcement to the University Funding Council of England and Wales that it’s overall funding will drop next year by a whopping £518million. The likely impact of this cut was enough for Phil Willis MP of the Universities Select Committee to predict “the end of the university system as we know it.”

The Barnett Formula dictates that as spending in England rises we will get a proportionate ‘read across’, the other side of the Barnett coin is that when spending in GB falls that too is passed onto the regions in a proportionate manner. So it is safe to assume that the Executive will soon face a further shortfall in its budget. Where devolution comes into play is that local Ministers may choose themselves how to absorb such cutbacks, just as previously they have decided that increased funding allocations should primarily be shared between the Departments of Education and Health. Now that bad times are here we can be sure that Departments and Ministers will not be rushing forward to surrender their budgets. That kind of collective politics has not yet arrived in Northern Ireland and it certainly won’t do so in this year of election.

David Cameron sent out Ken Clarke this past weekend to flag up the willingness of a future Tory administration to take hard decisions on tax and VAT. While Alastair Darling staved off the hard funding / saving decisions for a year it is clear that should Labour miraculously survive the next election, they too will be seeking to make significant savings. So whatever initiatives the NI Executive is able to implement their funding ability will be severely tested in the next political year.

However that is no reason to shirk from the challenge, because the second big issue facing us all this year, and I referred to it earlier as a positive one, will be the emergence of the economy from recession in 2010. All the indications are that the when the next GDP figures are unveiled they will show that the UK has officially come out of recession and already manufacturing output has begun to rise. The housing market locally would appear to have settled at last and anecdotally at least the retail sector had a very good Christmas. The manger of the prestigious Victoria Square reported in December that their takings were up 30% on the previous year. So how does this present a challenge to the Executive?

It will not be enough that our Government simply observes this transition from recession to growth, all are agreed that our private sector must be assisted and facilitated as businesses attempt to make the most of the any upturn. With limited resources this may be challenging but there are steps which could assist business survive the short to medium term and therefore be in a stronger position to grow in the long term. The tactical application of rates, the regulation of energy supply, a strong focus on innovation and research and development will all help local business.

On a very practical level a common show of political stability from the leaders of the Executive would go some distance when it comes to attracting outside investment. The current stagnation within the Executive and Assembly seems a long way from the days when Messrs Paisley and McGuinness made joint visits and were well received in the US and Europe; a major effort should be made to put on that sort of unified display once again.

The coming year will undoubtedly bring many challenges, some foreseen and some unpredictable. But if our political leaders can address the twin challenges of a decreasing budget and a potential upturn in the economy they will have had a good year.